Corporate governance and corporate finance practices in a Kuwait Stock Exchange market listed firm: a survey to confront theory with practice

Purpose– This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top financial managers of listed firms in Kuwait in the survey tool. It attempts to investigate whether theory aligns with the behaviour of financial managers in practice in an emerging market case.Design/methodology/approach– A survey was developed to focus primarily on the current corporate finance practices implemented by CFOs in listed companies in Kuwait. The target respondents are listed firms in the Kuwaiti Stock Exchange (KSE). The survey includes questions on topics that are closely related to capital budgeting, capital structure, cost of capital and dividend policy. For example, the survey asks the managers how they estimate their cost of equity (CAPM or other methods) and whether the impact of the weighted average cost of equity is taken into consideration in their capital structure choices.Findings– A surprising number of firms are now widely using IRR for decision making. CAPM is also in use, whereas WACC remains the most popular method used. There is some support for the “bird‐in‐hand” dividend theory in the tax‐free environment. Firms in Kuwait do not have any particular source of capital structure choices when it comes to how best to finance their projects as is the case in the US market. Firms in Kuwait are consciously striving for maximizing profits and those managers are regarded as their most important stakeholders. This may indicate the existence of agency problems.Research limitations/implications– The limitation of this study lies in the absence of empirical investigation on how corporate finance decisions may affect firms' performance in Kuwait. Hence, empirical validation will be performed by the authors in the next stage of this research, which will form the basis for further research. Empirical validation for the impact of corporate governance on performance is needed.Practical implications– This research may benefit managers and decision makers in many aspects, including having an understanding of applying popular and the most suitable corporate finance and corporate governance techniques in the management of their companies. In this research, the authors have identified the gap between practice and academia.Originality/value– To the best of the authors' knowledge, this is the first study to examine comprehensively major areas of financial policies and practices and corporate governance in an emerging market case, especially in the Middle East. Kuwait provides a unique institutional setting in its taxation system. Therefore, this study will make a contribution to the general literature in this field.

The role of cultural capital towards the development of a sustainable business model for design firm internationalization

This paper reports the results of three case studies of firms involved with design for the built environment who have been working in international markets for more than two decades. The first two firms are architectural practices and the third is a construction firm which designs and constructs. Their markets are diverse and their strategies have evolved over the two decades. There are numerous differences between countries including cultural, social, project governance structures, regulatory, procurement strategies, terminology, codes, etc. What is it that makes these firms able to develop sustainable business models in internationalisation? A grounded theory approach was used to examine the three case studies and develop a reflexive capability model drawing from the sociological theory of reflexivity to interpret the characteristics of the firms' ability to be able to adapt different international conditions. Twenty-two interviews were conducted across the three firms. Results indicated that sustainable business models rely upon the management of social, cultural and intellectual capital. The strategic management of capital leads to the development of increasing reflexive capability within the processes related to internationalisation. Reflexive capability is a characteristic of the three successful case study firms internationalising and working within global models of practice. This paper focuses on the role of cultural capital in a reflexive capability model for sustainable internationalisation.

Knowledge management in a major construction firm in Tawian: a case study-examining the impacts of KM initiatives within the firm.

This paper addresses knowledge management (KM) in a project management organisation through a case study. The case study organisation is a small- edium sized Taiwanese-owned construction company (staff size of approximately 50) with an annual turnover of approximately TWD50 (AUD$1.85) billion. Approximately one half of the company comprised project-related staff (e.g. construction project management, project documentation, estimation, procurement, and design), while the other comprised administrative and business-related staff (e.g. office administration and management, business development, and finance and accounting). The researcher undertook a series of surveys and one-on-one interviews whilst ‘embedded’ for several months with the organisation. As part of a larger research project, this case study was one of four case studies conducted in major construction organisations in Singapore, Taiwan, and Australia. The study revealed the recognition, importance and commitment of organisational culture to KM, and the effects the knowledge management initiatives have on the organisation’s ability to manage knowledge across its projects and deliver the projects at various ‘levels’ of the organisation (individual, project, departmental, and corporate). It concludes that a technologically and functionally sound KM infrastructure does not necessarily assure an organisation with a capability to manage knowledge. Organisations need to ensure that the KM repository is made up of quality and relevant contents (not just quantity), and that corporate culture (especially the willingness of individuals to share what they know) is a critical determining factor to the organisation’s ability to share, apply and create knowledge (i.e. low sharing capability leads to low application and creation capabilities).

Contracting-agency analysis of the association between firm risk, investment opportunity set, corporate governance and firm performance

Tests the efficiency of corporate controls (board monitoring and incentive contracts) for growth or risk firms. By exploring the implications of controls and studying their interactive effects on firm performance, this study demonstrates how and why different firms use corporate governance controls to align managers' and shareholders' interests.

How to write an unsuccessful entrepreneurial business plan : content analysis of the normative literature reveals a flawed paradigm

The study's aim was to investigate whether an Entrepreneurial Business Planning (EBP) paradigm could be discovered as a body of core, common maxims within the normative EBP literature (works of the 'how-to-write-a-successful-new-venture-business-plan' genre). It employed content analysis techniques adapted mainly from the methodological prescriptions of Krippendorf (1980) and Carney (1972). The textual investigation produced a comprehensive, quantitative data base capable of sufficient interpretative richness to discover that an established Entrepreneurial Business Planning paradigm does exist. Its major elements embrace two key assumptions, four strong mandates and four weaker mandates.

The discovery is significant for two main reasons. First, it provides a formally-researched, explicitly-articulated EBP paradigm. This can replace the anecdotal, unarticulated assumption (implicit in most of the normative EBP literature) that an EBP paradigm 'probably exists'. Second, the research redresses some of the imbalance between entrepreneurship teaching- where Entrepreneurial Business Planning is at the core of international curricula - and entrepreneurship research which has virtually ignored EBP as a topic worthy of serious scrutiny. A firm basis for critical, scholarly exploration of the neglected EBP field is now established. This takes the theory and practice of EBP into a new era beginning with recognition that the discovered EBP paradigm is badly flawed and likely, if blindly applied, to lead to the writing of unsuccessful business plans.

Effects of entrepreneurial and environmental sustainability orientations on firm performance: a study of small businesses in the Philippines

Why do small businesses in developing countries embrace sustainable business practices and what are the effects on their performance? We address these questions by drawing on the natural-resource based view of the firm to argue that the environmental sustainability orientation of small businesses can be explained by their entrepreneurial orientation. Our study of 197 small businesses in the Philippines shows that an entrepreneurial strategic orientation enables them to develop a more proactive stance toward environmental sustainability practices which lead to superior firm performance. The implications of the findings for future research and for public policy for small businesses are also discussed.

Ensuring balance in corporate governance : parts 2F.1 and 2F.1A of the Corporations Law

Effective corporate governance must balance the competing, and at times conflicting, objectives of efficient endeavour and accountability. The CLERP amendments to the Corporations Law introduced on 13 March 2000 go a long way towards providing this balance. While the business judgement rule was introduced to promote efficient endeavour, Pts 2F.1 and 2F.1A maintain corporate accountability. This article compares Pts 2F.t and 2F.1A of the Corporations Law. It is argued that, although there are procedural and substantive differences between the two parts that need to be understood by practitioners, the importance of the two Parts is that they work together to provide for a much-needed improvement and enhancement of shareholder rights and remedies, thus upholding accountability in corporate governance.

Risky business: stories from the field of rural community nurses' work in domestic violence.

This paper reports on a descriptive study into family violence in rural Victoria. Focus groups were held in a number of areas across rural Victoria with a total of 24 community nurse participants. The focus groups were audio-taped and the tapes transcribed to enable the clustering of themes. The dominant themes were: picking up cues, helping and helplessness, holding secrets and quiet resistance. Underpinning all these themes however, was the notion of 'risky business'. All nurses in the study gave examples of situations that they encountered; their ways of helping; of working sensitively; of working around a system that is unhelpful; and the ways in which their work while skilled, thoughtful and wise, is also costly in terms of the emotional wounds they carry. Rural nurses work with considerable risk and courage as they engage in the care and support of women experiencing family violence.

Impact of the new business tax system (alienation of personal services income) Act 2000

The implications of categorising income as "personal services income" and the actual meaning of this term have been marked with uncertainty. The Commissioner of Taxation has long asserted that "personal services income" inherently may not be derived by an entity other than the person whose exertions produce the income. In Liedig v FCT (1994) 28 ATR 141, however, Hill J held that in the absence of a specific legislative provision, there was no basis for the Commissioner's doctrine. The specific legislative measures Hill J required were put in place through the New Business Tax System (Alienation of Personal Services Income) Act 2000. In certain circumstances this Act prevents interposed entities from deriving personal services income. Such payments are attributed instead to the individual who performs the services.

It will also be seen, however, that these provisions do not apply to entities that are conducting a "personal services business". It is submitted that the combined effect of, inter alia, the Act's definition of "personal services income" and "personal services business" is to give the Act a narrower scope than the Commissioner's personal services doctrine. Moreover, it will be submitted that the statutory definition of personal services income also suffers from the same flaws that Hill J identified as relevant to the Commissioner's personal services doctrine.

An analysis of the association between firms' investment opportunities, board composition and firm performance

The purpose of this paper is to identify the variables that influence the board structure adopted by firms and the subsequent relationship to the firm's performance. The results of this study of 229 Australian firms show that firms' investment opportunities are strongly associated with a higher proportion of executive directors ("EDs") on the board. The results also show that the negative relationship between a firm's investment opportunity set ("IDS") and firm performance is weakened at higher levels of non-executive director board domination. These results have implications for policy setters and managers of firms with investment opportunities

Section 46 of the Trade Practices Act-has the High Court made a "u-turn" on "taking advantage"?

Examination of High Court decisions on misuse of market power in regard to the element of "taking advantage" reveals inconsistency of application. Whilst being consistent regarding the need for a connection between the market power and the impugned conduct, the High Court has not been consistent regarding the degree of connection required. Two streams have developed, one supporting a high degree of connection, the other a lower degree before a firm is found to have "taken advantage" of its market power. Added to this has been the development of the "rational business explanation" which, it is argued, is either used as a defence to a s 46 action or is premised on the higher threshold of connection. Initially the high Court supported the lower threshold. In later decisions, whilst expressing support for the earlier decisions, in application the High Court favoured the higher threshold and at one point the rational business explanation. This trend appears to have been reversed with the most recent High Court decision which indicates substantive support for the earlier s 46 decisions.

A review of employment relations theories and their application

New developments in the industrial relations and human resource management have moved management and employee bargaining down to the level of the firm. In doing so they have generated a growing level of interest in the conduct of employment relations, not just at the level of specialist managers, who have traditionally had the responsibility for dealing with issues in this area, but across management as a whole. There is thus a growing need for managers to place more emphasis on achieving a greater symmetry between commercial objectives and employment practices. This paper looks at the predicates of managerial authority and its legitimacy, and how personal assumptions and value systems (i.e., ‘frames of reference’) held by managers can predispose them to view the nature of work and workplace relations in particular ways. The paper also presents
and aligns a range of contemporary theories within the province of such systems, with the aim being to show how judgements made about the worth or otherwise of a given range of theories are inevitably shaped by the type of value system and set of assumptions one holds towards the
world of work. The paper concludes by offering a practical guide to managers on how to evaluate their own assumptions and value systems when applying the noted theories and concepts to real world circumstances. In doing so, the paper provides a tool kit of theories and concepts that should allow managers to avoid engaging in workforce management practices that are either illconceived or based on intuitive premises.

Incorporating community objectives in improved wetland management: the use of the analytic hierarchy process

Wetlands in Australia provide considerable ecological, economic, environmental and social benefits. However, the use of wetlands has been indiscriminate and significant damage to many Australian wetlands has occurred. During the last 150 years one third of the wetlands in Victoria have been lost. A conspicuous problem in wetland management is the paucity of involvement by stakeholders. This paper uses the Analytic Hierarchy Process (AHP) to incorporate stakeholder objectives in the ‘Wonga Wetlands’ on the Murray River. The study shows that the AHP can explicitly incorporate stakeholder preferences and multiple objectives to evaluate management options. The AHP also provides several approaches for policy makers to arrive at policy decisions.