An investigation into the drivers of Australian REIT merger and acquisition announcements

Purpose – The purpose of this paper is to use Australian Real Estate Investment Trust (A-REIT) data to empirically examine potential influencing factors on A-REITs becoming a bidder or a target in the mergers and acquisitions (M&A) area.

Design/methodology/approach – This study uses logistic regression analysis to investigate the odds of publically traded A-REITs being either a bidder or a target as a function of a number of financial and corporate governance variables.

Findings – Prior research in the US REIT M&A area has shown that target size is inversely related to takeover likelihood; in contrast, the authors’ Australian results show that size has a positive impact. Prior research on share price and asset performance has shown that underperformance increases the odds of an entity becoming a target, but this paper’s results further support these findings and provide confirmation of the inefficient management hypothesis. For acquirers it was found that leverage, cash balances, management structure, the level of shares held by related parties and the global financial crisis have an important impact on bidder likelihood.

Practical implications – Given that the literature suggests that investors can earn significant positive abnormal returns by owning targets, but incur significant abnormal losses by owning bidders, at announcement, this study will be useful to fund managers and other investors in A-REITs by investigating the characteristics of those firms that become targets and bidders.

Originality/value – This paper adds to the recent US REIT M&A literature by examining the second biggest REIT market in the world and reporting a number of factors that might influence A-REITs to become targets or bidders.

An approach for wind power integration using demand side resources

Renewable energy resources, especially wind power, are expected to provide a considerable portion of the world energy requirements in the near future. Large-scale wind power penetration impacts the electricity industry in many aspects and raises a number of technical challenges for the electricity network. A day-ahead network-constrained market clearing formulation is proposed which considers demand side resources. The proposed approach can provide flexible load profile and reduce the need for ramp up/down services by the conventional generators. This method can potentially facilitate a large penetration of wind power by shifting the wind power generation from the off-peak periods to the high-peak hours. The validity of the proposed approach has been verified using the IEEE 30 bus and 57 bus test systems.

A fractional cointegration approach to testing the Ohlson accounting based valuation model

We examine the long-run relationship between market value, book value, and residual income in the Ohlson (Contemp Acc Res 11(2):661-687, 1995) model. In particular, we test if market value is cointegrated with book value and residual income in light of their non-stationary behaviors. We find that cointegration applies to only 51 % of the sample firms, casting doubt that book value and residual income alone are adequate in tracking variations in market value, yet we find that market value is fractional cointegrated with book value and residual income for 89 % of the sample firms. This implies that the long-run relationship follows a slow but mean-reverting process. Our results therefore support the Ohlson model. © 2012 Springer Science+Business Media New York.

Students' intercultural development through language learning in Vietnamese tertiary education: a case study on the use of film as an innovative approach

Vietnam's open-door policy, its socialist-oriented market economy, recent growth in cross-border education and skills mobility, regionalisation and globalisation have created an increasing demand for Vietnamese graduates to develop not only their English language but also their intercultural competence. This paper discusses the issue of student intercultural learning and development in the Vietnamese English as a foreign language (EFL) class. Especially, it addresses the use of film as an innovative approach to engage Vietnamese students in intercultural learning and development in the EFL classroom. The study reported in this paper draws on rich sources of data which include in-depth interviews with students, student reflective journals and video-recorded class observations at a university in central Vietnam. Overall, five key themes relating to student intercultural learning through film have been identified in this study. These include enhancing knowledge about cultural differences, engaging in cross-cultural comparison, breaking cultural stereotypes, immersing students in authentic learning and living in the world of ‘other’ culture and the integrated mode of intercultural language learning. The study is a significant contribution to scholarly research on the use of media objects to enhance student intercultural learning in language classrooms in developing countries.

Predicting brand preferences: an examination of the predictive power of consumer personality and values in the Australian fashion market

Purpose –
This paper aims to examine and compare the strength of personality and values in predicting brand preferences. It seeks to accomplish three main objectives. First, it will evaluate the strength of personality and values in predicting consumers' brand preferences. Second, it will examine whether values exercise a mediating role between personality and brand preferences. Finally, it will examine the mediating role of prestige sensitivity in influencing brand preferences.

Design/methodology/approach – 

A discrete simulation approach to spatial allocation of commodity production for revenue optimisation over a local region

A simulation approach is described for the spatial allocation of crops across a region in order to maximise total revenue. The model uses inputs from GIS-based land suitability analysis to provide data on yields for a range of commodities, where the land suitability for the crops can be determined by either biophysical models or multi-criteria analysis. The objective of the study was to gain some indication of the magnitude of improvement possible in revenue, based on the convergence results for the optimisation (subject to estimated production quantities and market prices). The basic structure of the model allows for scaling up to larger problems with additional inputs and finer cell resolution. The software produces a visualisation of crop spatial allocation across the region and is compatible with statistical uncertainty analysis. The results of model simulations revealed a significant increase in revenue is possible using this approach and, when projected over the full region, suggests the possibility of significant economic benefits.

A supply chain approach to meat goat industry development

The Victorian goat meat industry is a significant contributor to export earnings, which is derived largely from the harvest of feral goats. The potential for exports of farmed goat meat into Asian product markets is being developed in a supply chain approach with producers, processors, exporters and Asian importers. Producers have been networked in four locations to improve supply capability and participate in production and economic benchmarking. In the absence of an existing market for premium farmed goat meat, a larger group of producers are cooperating with a marketer to develop a niche market in the Asian food service sector. This presents a challenge to the group in developing commercial relationships and playing a role in the marketing of their goat meat.

A panel vector error correction approach to forecasting demand in regional construction markets

Reliable forecasting as to the level of aggregate demand for construction is of vital importance to developers, builders and policymakers. Previous construction demand forecasting studies mainly focused on temporal estimating using national aggregate data. The construction market can be better represented by a group of interconnected regions or local markets rather than a national aggregate, and yet regional forecasting techniques have rarely been applied. Furthermore, limited research has applied regional variations in construction markets to construction demand modelling and forecasting. A new comprehensive method is used, a panel vector error correction approach, to forecast regional construction demand using Australia’s state-level data. The links between regional construction demand and general economic indicators are investigated by panel cointegration and causality analysis. The empirical results suggest that both long-run and causal links are found between regional construction demand and construction price, state income, population, unemployment rates and interest rates. The panel vector error correction model can provide reliable and robust forecasting with less than 10% of the mean absolute percentage error for a medium-term trend of regional construction demand and outperforms the conventional forecasting models (panel multiple regression and time series multiple regression model). The key macroeconomic factors of construction demand variations across regions in Australia are also presented. The findings and robust econometric techniques used are valuable to construction economists in examining future construction markets at a regional level.

The relationship between labour market conditions and welfare receipt in Australia: A stock-flow analysis

Understanding the determinants of changes in welfare caseloads is an important, but little studied, topic in Australia. This paper evaluates the role of labour market conditions in explaining the changes in the Australian welfare caseload since the late 1990s. The paper employs a stock-flow approach to better control for persistence in welfare receipt and includes different specifications to deal with measurement error in labour market data. The results suggest that the labour market is an important determinant of movements on and off welfare, accounting for the majority of the caseload decline during 1997-2005. The results also highlight the importance of robustness checks when data are measured with error.

The efficient market hypothesis and corporate event waves: part 1

Efficient markets are commonly defined as ones that do not allow investors to earn above-average returns without accepting above-average risk. In a traditional framework, where investors are rational and there are no frictions, the efficient market hypothesis (EMH) states that a security's price reflects its fundamental value, which is the sum of its discounted expected future cash flows. Put simply, under the EMH, securities are "rightly priced." Through this study, the author finds that while the EMH has been widely accepted for decades among academics, practitioners and regulators still appear to be unconvinced. From a behavioral perspective, the author shows that human psychology and sentiment factors can account for some discrepancies in financial markets. He also finds evidence of limited arbitrage being risky and costly and, hence, impeding the ability of investors to take advantage of profitable opportunities. This study provides an extensive analysis of the critical discussions surrounding the EMH and deepens and strengthens the understanding of the EMH, as well as the arguments for and against.

Portfolio delivery approach to township sewage treatment facilities in China: a case study

 The wide need for sewage treatment facilities at the township level across China implies an emerging niche market for water and sanitation developers, investors and financiers. However this potential market is difficult to enter with traditional financing and delivery methods, because township sewage features small amount, volatile quantity, geographically scattering, immature fee charging system, weak affordability, and lack of capacities. A group of concession sewage treatment projects collectively implemented by a private company in the Changsha County of Hunan Province under the so called ‘Changsha Model’ provided innovative solutions. This cases study first examined the portfolio approach in terms of multiple delivery method integration, technology, and centralized control system, and evaluated the replicability of the new model. Practices and lessons learned from the case were then presented and summarized that can be applied to the following township sewage treatment facility development. Last, the Changsha Model was compared with similar infrastructure portfolio delivery solutions applied in the US.

A stakeholder approach to corporate social responsibility, reputation and business performance

Purpose - This paper aims to investigate business managers' assessment of stakeholders' influence on corporate social responsibility (CSR) initiatives. The key stakeholders included "employees" and "unions" as internal and "public", the "media" and the "government" as external stakeholders. The purpose was to estimate the influence of stakeholders that managers perceive as important. Moreover, the study sought to identify association between the CSR construct and corporate reputation and in turn whether this influences business performance. Design/methodology/approach - This study uses a mail survey with a random sampling of senior managers sourced from Dun & Bradstreet's Australian business database, focusing on large organizations (i.e. minimum $10 million p.a. reported sales and minimum 100 employees) as the selection criteria. A conceptual model was developed and tested using structural equation modeling. Findings - The results identified that "employees" and the "public" are perceived to be the influential stakeholder groups in CSR decision-making. There was evidence of a positive relationship between the CSR construct and reputation, which in turn influenced market share, but not profitability. Research limitations/implications - This study examined a cross-section of organizations using Dun & Bradstreet's database of Australian businesses and may not fully represent the Australian business mix. The effective response rate of 7.2 per cent appears to be low, even though it is comparable with other research in the CSR area. There may have been some self-selection by the respondents, although there were no statistically significant differences identified in the corporate characteristics of those invited to participate and those responding with usable questionnaires. Practical implications - Managers can adopt a stakeholder-influenced CSR strategy to generate strong corporate reputation to improve business performance. It is important to ensure that the interests of "employees" and "public" stakeholders are addressed within organizational strategy. Respondents were less concerned about government stakeholders and thus government involvement in organizational CSR may need to be revisited. Social implications - The major concern that emerges from these findings is the absence of the perceived importance of regulatory stakeholders on firms' CSR activities. Regulatory controls of CSR messages could reduce or eliminate inaccurate and misleading information to the public. Originality/value - The analysis explains the perceived relative influence of stakeholders on CSR decisions. It also provides an understanding of the link between organizational CSR reputation and organization's performance.

Economic Bias of Weather Forecasting: A Spatial Modeling Approach

The value of accurate weather forecast information is substantial. In this paper we examine competition among forecast providers and its implications for the quality of forecasts. A simple economic model shows that an economic bias geographical inequality in forecast accuracy arises due to the extent of the market. Using the unique data on daily high temperature forecasts for 704 U.S. cities, we find that forecast accuracy increases with population and income. Furthermore, the economic bias gets larger when the day of forecasting is closer to the target day; i.e. when people are more concerned about the quality of forecasts. The results hold even after we control for location-specific heterogeneity and difficulty of forecasting.

Estimating Forward Pricing Function: How Efficient is Indian Stock Index Futures Market?

This paper uses Indian stock futures data to explore unbiased expectations and efficient market hypothesis. Having experienced voluminous transactions within a short time span after its establishment, the Indian stock futures market provides an unparalleled case for exploring these issues involving expectation and efficiency. Besides analyzing market efficiency between cash and futures prices using cointegration and error correction frameworks, the efficiency hypothesis is also investigated after explicitly modeling the underlying state of the market (expansion or contraction) through the first-order Markov switching set-up. The results based on Markov switching analysis show that relatively longer time horizon is more effective in eliminating arbitrage opportunities than the short run.

The relationship between stock returns and the foreign exchange rate: the ARDL approach

This study employs the ARDL cointegration approach in order to examine the impact
of financial liberalization on the relationships between the exchange rate and share
market performance in China. We discovered that cointegration has existed between the
Shanghai A Share Index and the exchange rate of the renminbi against the US dollar
and Hong Kong dollar since 2005, when the Chinese exchange rate regime became a
flexible, managed, floating system. We found that both the exchange rate and the money
supply influenced stock price, with a positive correlation. We further show that the
money supply increase was largely caused by a huge ‘hot money’ inflow from other
countries in recent years. After local currency appreciation, hot money, followed by
the money supply increase, pushed the market into a high level, based on expectations
regarding the local currency’s further appreciation.