Defining ethical investment and its demography in Australia

While ethical investment is relatively new in Australia, it is a well defined phenomenon in the United States and United Kingdom, subject to variations in interpretation in its practical implementation. Characteristics of ethical investment decision-making suggest ethical investors may be demographically different from "ordinary" investors. This descriptive paper reports on a survey of equity investors in Australia, comparing the average investor and an ethical investor. The main findings are that there is evidence of a strong gender effect, with females predominating among ethical investors, and that these investors are relatively young, highly educated and possessing small portfolios.

The ethical, social and environmental reporting-performance portrayal gap

The purpose of this article is twofold. First, it assesses in detail the extent to which corporate reporting on ethical, social and environmental issues reflects corporate performance in case study company Alpha. This “reporting-performance” portrayal gap is a key measure of the extent to which an organisation is accountable to its stakeholders. Alpha's disclosures concerning its ethical, social and environmental performance for the years 1993 and 1999 were compared with information obtained on Alpha's performance from other sources. Two different pictures of performance emerged leading to the conclusion that, in the case of Alpha, reports do not demonstrate a high level of accountability to key stakeholder groups on ethical, social and environmental issues. Of particular concern is the lack of “completeness” of reporting. Second, the article assesses the potential of recent standards or guidelines developed by the Global Reporting Initiative (GRI) and the Institute of Social and Ethical AccountAbility (AccountAbility) as well as the industry's own “responsible care” initiative to reduce this “reporting-performance” portrayal gap and improve corporate accountability. The conclusions point to the need for other measures to improve accountability including mandatory reporting guidelines, better developed audit guidelines, a mandatory audit requirement for MNCs and a radical overhaul of corporate governance systems.

A critical review of relations between corporate responsibility research and practice

This essay identifies epistemological, theoretical and methodological problems in a potentially influential subset of the interdisciplinary corporate responsibility literature, that which appears in the management literature. The received conceptualization of stakeholder analysis is criticised by identifying six sets of factors conventionally considered as promoting social responsibilities in the firm: inter-organizational factors, economic competitors, institutional investors, end-consumers, government regulators and non-governmental organizations. Each is addressed on conceptual grounds, its empirical salience in terms of the latest relevant research and prospects to be a significant factor in promoting outcomes consistent with social welfare. Despite obvious antagonistic relations between organization-centred economic objectives and extra-organizational-directed social considerations, the huge body of research we address drifts in a disengaged Sargasso Sea. The essay argues for appropriate directions for continuing business ethics/responsibility/corporate citizenship research, suggesting certain sociological works on moral leadership, moral courage, and academic leadership.

Impact of social expectations on ethical governance of sport organisations

Sport business is different; one of these differences is the significant and important cultural role that sport plays in society. This paper investigates the social expectations of sport, and how these expectations impact on the management and governance of sport organisations. Interviews were undertaken with the directors and CEOs of the Australian Football League and its clubs, to examine the concept of social expectations and ethical governance. Five key themes of the social expectations of sport were found: scrutiny, sport business, sport context, social investment, and the historical development of the club. Each of these themes was identified through the data analysis as having a potential impact on the management and ethical governance of sport organisations. A clearer understanding of the social and cultural context within which sport organisations operate, enables sport organisations to implement sound policy and practices for ethical governance.

Valuation and reporting of native fauna in monetary terms: compatibility between a market-Based system and natural resources?

A change in community values and priorities has introduced ethical,
environmental and social issues into the way in which business conducts
its activities. There are an increasing number of managed investment funds focusing on socially responsible investment (SRI) by concentrating on firms that operate according to predetermined criteria for environmental, social and ethical issues. For investors in these funds environmental stewardship issues are integrated with concern over financial resources and performance. In this paper the accounting and reporting by business activities concerned with conservation of wildlife are examined. The world of accounting has functioned for many years with relatively few accounting standards devoted to specialised industry needs. In 1998 the Australian Accounting Standards Board and in 2001 the International Accounting Standards Board issued standards devoted to agriculture. Both standards deal with the reporting of managed biological assets and require application of essentially the same approaches despite the Australian standard requiring net market value while the International standard requires fair value. In this paper we analyse how one conservation firm Earth Sanctuaries Ltd. (ESL) has applied AASB 1037 and then we explore the implications for conservation firms operating in geographical locations outside Australia. It is suggested that AASB 1037 and indeed lAS 41 may not provide value appropriate information for investor decisions relating to accounting profits for such firms. Our examination shows that it is appropriate to reconsider accounting guidelines provided by these standards in order to link the information relating to economic and environmental performance. Transparency may be improved by a move closer to Elkington 's (1997) triple bottom line reporting. We therefore contend that the issues arising from the use ofAASB 1037 and lAS 41 need to be widely considered by all standard setters, particularly given the increasing attention to SRI.

The association between the investment opportunity set and corporate financing and dividend decisions: some Australian evidence

Summarizes previous research on the investment opportunity set (IOS) using price-based and investment-based proxies and variance measures; and develops hypotheses on the relationship between IOS, debt/equity ratios and dividend policies. Tests them on 1990-1998 data from listed Australian companies and explains the methodology, which builds on Gover and Gover (1993) by including more recent proxy variables. Finds no significant results from low growth firms, although some high growth firms show lower debt/equity ratios and dividends. Questions the robustness of existing IOS proxies in the Australian context and calls for further research.

Ethical ramifications of corporatised legal practice

Ethical constraints applying to lawyers are largely found in formal restrictions in legislation - ethical duties arise as a result of a lawyer's service to the public - business ethics - corporatisation and the push for Multi-Disciplinary Practices (MDPs) - duty of confidentiality - avoiding conflicts of interest - the advent of MDP will add further pressures to lawyers juggling competing interests.

Tax incentives for foreign direct investment part II : Design considerations

Part I of this article concluded that tax incentives for foreign direct investment (FDI) have become increasingly common over the past 10 years or so, especially among developing countries, and that there is substantial evidence to support the proposition that tax considerations now play an important role in many investment decisions. Countries seeking to attract FDI often feel compelled to offer tax inducements that are at least as attractive as those offered by their neighbours or competitors. Countries do so at a cost, however, and that cost may be substantial. Governments are thus placed in a dilemma - can they afford to cut taxes in order to attract investment, and can they afford not to? The second part of this article assumes that countries, and especially most developing countries, will continue to feel obliged to provide tax incentives. The aim of this part therefore is to examine ways in which those incentives can be made more effective and more efficient, thereby reducing their cost to the host country.

Tax incentives for foreign direct investment part I : Recent trends and countertrends

According to the conventional wisdom, tax incentives for investment - in particular for foreign direct investment (FDI) - are not recommended. That is the view held almost universally by theorists and by the international bodies that advise on tax matters.' Tax incentives are bad in theory and bad in practice. They are bad in theory principally because they cause distortions: investment decisions are made that would not have been made without the inducement of special tax concessions. They are bad in practice, being both ineffective and inefficient. They are ineffective in that tax considerations are only rarely a major determinant in FDI decisions; they are inefficient because their cost, in terms of tax revenue foregone, often far exceeds any benefits they may produce. Other criticisms are also frequently levelled against tax incentives for FDI - they are inequitable (since they benefit some investors but not others), they are difficult to administer and open to abuse, and they lack transparency. Thus, it is not surprising that ''the standard advice given by institutions like the World Bank and the lMF to developing countries is to refrain from offering tax incentives to foreign investors".2 The purpose of this article is not to question that advice or to challenge the conventional wisdom - except in one respect. Recent evidence does suggest that tax considerations are an increasingly important factor in investment decisions and that special tax incentives have become substantially more effective as instruments for attracting FDI than they were 10 or 20 years ago.3 The first part of this article, published here, examines some of that evidence, reviews some recent trends in national policies towards FDI, attempts to suggest why investment incentives have become more important and more effective, and looks at the pressures that are exerted on governments, especially in developing countries, to compete for FDI by offering special incentives. The second part of the article, to be published in the Bulletin next month, assumes that many countries will continue to offer tax incentives to investors regardless of the best advice, and considers how incentives might be designed in order to increase their effectiveness and efficiency.

A multi-agent framework for financial investment planning

If a company or person wants to invest a lot of money, where, when, and how should the investment go? A multi-agent based Financial Investment Planner may give some reasonable answers to the above question. Good advice is mainly based on adequate information, rich knowledge, and great
skills to use knowledge and information. To this end, this planner consists of four principal components information gathering agents that are responsible for gathering relevant information on the Internet, data mining agents that are in charge of discovering knowledge from retrieved information as well as other relevant databases, group decision making agents that can effectively use available knowledge and appropriate information to make reasonable decisions (investment advice), and a graphical user interface that interacts with users. This paper is focused on the group decision making part. The design and implementation of an agent-based hybrid intelligent system - agent-based soft computing society are detailed.

In whose interests? The best interests principle under ethical scrutiny

This paper critically examines the best interests principle and its role in making decisions about intensive care treatment. In current practice the best interests principle is sometimes relied upon to guide decision making in circumstances when the patient is incompetent, although it is intrinsically linked to inconsistent assumptions about what is meant by quality of life. This situation means that there is potential that moral errors will be made that may result in an unwanted extension of life for some individuals or the premature death of others.

It is difficult to justify such decision making on ethical grounds. A greater understanding of the best interests principle, and consequently the concept of quality of life, is needed in order to ensure that decision making about intensive care is ethically defensible. It is argued that an ideal theory of quality of life provides an appropriate framework for best interests decisions, and that the decision making process ought to, whenever possible, involve the patient's close family.

Exports, Inward Foreign Direct Investment (FDI) and Regional Economic Growth in China

The relationship between exports and economic growth is strong in developing economies. Both externality effects of exports on the non-exports sector and higher marginal productivity in the exports sector in relation to the non-exports sector play an important role in promoting exports and GDP growth. The underlying theoretical model of FEDER, 1982, is used with the data on the Chinese provinces and it is shown that the economic structure, degree of openness and policy environment have a significant role in the relationship between exports and economic growth.

Foreign Direct Investment and Regional Export Performance in China

This paper investigates the impact of foreign direct investment (FDI) on the export performance of China at the provincial level. First, it presents a theoretical discussion of the impact of FDI on foreign trade, and then an empirical study of the impact of FDI on the export performance of regions in Chin. It has been found that the impact of FDI on exports differs across three macro-regions in China. The effect is stronger in the coastal region than in the inland regions. Although FDI shows a positive and significant impact on exports from the central region, its impact on the western region is found to be insignificant.

Investment opportunities and leverage: some Australian evidence on the role of board monitoring and director equity ownership

This paper tests the hypothesis that the negative relationship between investment opportunity set (IOS) and debt is moderated by board monitoring and director equity ownership. According to contracting theory, firms with high growth opportunities (high IOS) are associated with lower levels of debt as a result of the asset substitution and the under-investment problem. However, our hypotheses test the conjecture that the negative debt / IOS relationship will be moderated by the proportion of non-executive directors (NEDs) on the board and director equity ownership. NEDs provide higher monitoring which reduces management discretion while director equity ownership provides incentives for managers to maximize the value of the firm. More specifically, we expect that high growth firms with a higher proportion of non-executive directors and director equity ownership are less likely to be associated with asset substitution and under investment. Thus, the negative investment opportunity set / debt relationship will be weaker for firms with higher levels of non-executive directors and high director equity ownership. Data collected from Australian companies support both these two hypotheses. Results have significant implications for corporate finance theory.

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