Determinants of efficient risk allocation in privately financed public infrastructure projects in Australia

Risk allocation in privately financed public infrastructure projects, which are mainly referred to as public-private partnership (PPP) projects, is a challenging job due to the nature of incomplete contracting. An investigation into the mechanism that guides the formation of efficient risk allocation strategies is thus desirable. Drawing on the transaction cost economics and resource-based view of organizational capability, this paper has identified five main features of the transactions associated with risk allocation in PPP projects. They include partners’ risk management routine, partners’ risk management mechanism, partners’ cooperation history, risk management environmental uncertainty, and partners’ risk management commitment. For achieving cost efficiency, different risk allocation strategies may suit different conditions of the features. Accordingly, a theoretical framework and five hypotheses were proposed for testing. Data collected in an industrywide survey were analyzed using multiple linear regression technique. It was found that generally, the identified features are determinants in the decision-making process of efficient risk allocation. Therefore, the proposed theoretical framework provides both government and private agencies with not only a logical and holistic understanding of but also a support tool for decision making on risk allocation strategy in PPP projects. Study limitations and future research directions are also set out.

Neurofuzzy decision support system for efficient risk allocation in public-private partnership infrastructure projects

The performance of public-private partnership (PPP) infrastructure projects is largely contingent on whether the adopted risk allocation (RA) strategy is efficient. Theoretical frameworks drawing on the transaction cost economics and the resource-based view of organizational capability are able to explain the underlying mechanism but unable to accurately forecast efficient RA strategies. In this paper, a neurofuzzy decision support system (NFDSS) was developed to assist in the RA decision-making process in PPP projects. By combining fuzzy and neural network techniques, a synthesized fuzzy inference system was established and taken as the core component of the NFDSS. Evaluation results show that the NFDSS can forecast efficient RA strategies for PPP infrastructure projects at a highly accurate and effective level. A real PPP infrastructure project is used to demonstrate the NFDSS and its practical significance.

Outsourcing of internal audit services in Australian firms : some preliminary evidence

Although internal auditing (IA) services have been traditionally performed in-house, organizations are increasingly outsourcing such services. Using a Transaction Cost Economics (TCE) perspective, this study examined the influence of several organizational-level variables on the decision to outsource or in-house their internal audit function. The study also identified the type of IA services that were likely to be out-sourced rather than in-housed, the extent to which incumbent external financial statement auditors participated in outsourced arrangements and the level of interaction between the internal audit provider and audit committees. The results have implications for auditor independence, corporate governance and organizational performance.

Reliability of web services

This thesis explores the fault tolerance issues of web services computing and proposes a model for reliability of transaction-oriented web services applications.

Risk-based trust management for e-commerce

Electronic commerce (e-commerce) offers enormous opportunities for online trading while at the same time presenting potential risks. Although various mechanisms have been developed to elevate trust in e-commerce, research shows that shoppers continue to be skeptical about buying online and lack of trust is often cited as the main reason for it. Thus, enhancing success in e-commerce requires eliminating or reducing the risks. In this chapter, we present a multi-attribute trust management model that incorporates trust, transaction costs and product warranties. The new trust management system enables potential buyers to determine the risk level of a product before committing to proceed with the transaction. This is useful to online buyers as it allows them to be aware of the risk level and subsequently take the appropriate actions to minimize potential risks before engaging in risky businesses. Results of various simulation experiments show that the proposed multi-attribute trust management system can be highly effective in identifying risky transaction in electronic market places.

An parallel information retrieval method for e-commerce

An online transaction always retrieves a large amount of information before making decisions. Currently, the parallel methods for retrieving such information can only provide a similar performance to serial methods. In this paper we first perform an analysis to determine the factors that affect the performance of exiting methods, i.e., HQR and EHQR, and show that the several of these factors are not considered by these methods. Motivated by this, we propose a new dispatch scheme called AEHQR, which takes into account the features of parallel dispatching. In addition, we provide cost models that determine the optimal performance achievable by any parallel dispatching method. Using experimental comparison, we illustrate that the AEHQR is significantly outperforms the HQR and EHQR under all conditions.

Beyond e-commerce: an entrepreneurial business modelling method for profitable e-venturing

E- business is used as a term that embraces e-commerce, its commercial exchange or transaction component. Both are subsets of a larger concept, e-venturing. E-business is a major disruptive innovation that is rapidly changing many of the accepted norms of effective management. So the paper revisits and reassesses several established principles of economics, strategy and entrepreneurship to place them in the context of the forces driving the emerging e-business economy. Entrepreneurship is applied as a 'framework enrichener', model-building tool and critical organisational behaviour to guide integration of e-business strategy into the total organisational strategy of a profit-seeking firm This permits development of a new business modelling process, labelled 'map and locate', that adapts a combination of entrepreneurial and strategic imperatives to the internet environment. The process assumes that value-provision, competitive distinction and profitability are the three essentials of any successful e-business strategy design and execution. Apart from its general conceptual role of linking strategic and entrepreneurial thinking, the 'map and locate' modelling process can be used as a practical tool for specific performance in a variety of circumstances. It focuses on learning and the development of metrics useful for measuring progress towards achievement of target outcomes.

Thai hedging practices : post Asian financial crisis

This paper provides survey evidence captured from a sample of 113 respondents to a 2008 questionnaire that was sent to 344 listed non-financial companies in Thailand. The study examines how Thai companies manage their exchange rate exposure post Asian Financial Crisis.

Thailand is an interesting case study because it was a country at the core of the 1997 financial meltdown and was one of the first forced by the crisis to move from a fixed to a floating exchange rate regime. It is therefore constructive to examine how businesses in Thailand have coped with a shift from a fixed to floating exchange rate and to examine how they manage their exchange rate exposure post 1997.

Findings indicate that companies that use currency derivatives do so to reduce volatile cash flows are less risky and tend to be more profitable than companies that do not use currency derivatives. This is consistent with the theory that hedging increases the value of the firm.

The type of instruments that companies in Thailand use and how they are used is similar to what other studies find in other countries. Matching and the use of forward contracts are the most common ways that companies manage transaction exposure. The study also confirms that companies with higher levels of international business engagement are more likely to use currency derivatives.

What is unique in Thailand is that Thai businesses are less rigorous in their internal control of their currency hedging activities. It is therefore recommended that companies consider a documented hedging policy and that senior management actively monitor the policy and currency hedging activity.

Comparing different economic linkages among commodity futures

Gasoline (GA) and kerosene (KO) are extracted from crude oil (CO), such that the three fuel commodities share a chemical link. On the other hand, GA also shares an industrial link with natural rubber (NR) and palladium (PA) as complementary commodities that are heavily consumed by the automobile industry. We contrast the information content embedded in the two economic linkages. Focusing on TOCOM futures contracts written on the five commodities and centering on GA, we confirm that incremental information provided by either CO, KO or NR, PA over a buy-and-hold strategy and a naive forecast, are both statistically and economically significant. While the chemical link forecast is more profitable, a double-link forecast generated from a VECM with two cointegrating vectors (KO-GA and GANR prices) outperforms both single-link forecasts based on risk-adjusted profit net of transaction costs. Further comparisons against the profitability of commodity-based momentum strategies documented in Erb and Harvey (2006) and Miffre and Rallis (2007) show that the double-link forecast holds its own against the most profitable of the 75 momentum strategies considered. This strongly suggests that not only are there incremental profits to be gained from harnessing and combining economic links among commodity futures, the resultant incremental profits are economically significant against other proven commodity-based trading strategies in the existing literature.

Dynamically opted protection envelope (DOPE) - A cost-effective strategy of insuring an investment portfolio

Popular ways of hedging downside risk of a stock portfolio is by means of a constant proportion portfolio insurance (CPPI) strategy or by means of an options-based portfolio insurance strategy (OBPI). However both have drawbacks in terms of practical applicability given transaction costs. Moreover they are not useful in times of very low liquidity e.g. in a market crash. Here we shall first review the common portfolio insurance techniques and then posit an alternative approach using a zero-coupon bond to extract downside coverage to the extent desired by an investor. While the posited strategy will not guarantee full downside protection for the entire investment horizon, it is unaffected by transaction costs resulting from need to periodically reallocate funds and is a lot easier to implement practically compared to options-based strategies. Unlike CPPI and OBPI, it will work in a crash situation too.

Consumers who don't want to look for information

A model to identify and classify consumers with high resistance to searching for information (HRSI) was developed and tested. We found that individuals with high levels of confidence about a purchase but who also ascribed low levels of personal importance to the transaction were significantly (p=.004) more likely to be HRSI. Using Multiple Discriminant Analysis, our model classified and predicted HRSI consumers well (p=.004, 57% above chance) but not low-resistance consumers (p=.6, 26.4% below chance).

Secure buyer - seller watermarking protocol

In the existing watermarking protocols, a trusted third party (TTP) is introduced to guarantee that a protocol is fair to both the seller and buyer in a digital content transaction. However, the TTP decreases the security and affects the protocol implementation. To address this issue, in this article a secure buyer–seller watermarking protocol without the assistance of a TTP is proposed in which there are only two participants, a seller and a buyer. Based on the idea of sharing a secret, a watermark embedded in digital content to trace piracy is composed of two pieces of secret information, one produced by the seller and one by the buyer. Since neither knows the exact watermark, the buyer cannot remove the watermark from watermarked digital content, and at the same time the seller cannot fabricate piracy to frame an innocent buyer. In other words, the proposed protocol can trace piracy and protect the customer’s rights. In addition, because no third party is introduced into the proposed protocol, the problem of a seller (or a buyer) colluding with a third party to cheat the buyer (or the seller), namely, the conspiracy problem, can be avoided.