Industry expertise, information leakage and the choice of M&A advisors

This paper examines the impacts of M&A advisors’ industry expertise on firms’choice of advisors in mergers and acquisitions. We show that an investment bank’s expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counter party. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in thesame industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.

Banking on ICT : how the Tuvalu financial services industry benefits from investment in ICT

Financial service industries in every country have made substantial investments in information and communication technologies (ICTs). What have been the benefits from this investment? This research extends the decades of research into the relationship between ICT investment and organisational performance in several ways. First the study uses the resource-based value framework to propose an ICT Investment Model to comprehensively describe the relationship between ICT investment and organisational performance. Second, the research identifies nine specific benefits the Tuvalu financial services industry (TFSI) has received from ICT investment. Third, the study does so with a qualitative research methodology in a specific industry in a developing country (most studies in this area are quantitative and have a national or multi-industry perspective in an economically developed country). Key benefits from ICT investment in the TFSI include improvements in collaboration, efficiency, data monitoring and communication.

Do dot coms add value : a preliminary study of the market capitalisation of Australian and Indian telecoms and banking sectors

E-Business is increasingly reshaping the way businesses operate across the globe. Globally, businesses in the banking and telecoms sectors have been re-engineering their value chains by adopting e-Business presence by means of dot com launches. The second half of the 1990s, however, saw both the rise and subsequent collapse of dot com entities as a major focus of investment interest, with consequent speculation over the viability of this corporate vehicle. The perceived increase in market capitalisation by means of these ventures during the boom period is now not so certain. In this paper, we report the results of a preliminary study which investigated the impact of dot com launches on market capitalisation within the banking and telecoms sectors of Australia and India.

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.

Banking regulation and market forces in Australia

The purpose of this paper is to use Kane's notion of the regulatory dialectic to analyse the changing nature of bank regulation in Australia. Throughout Australia's economic history, economic regulation of the Australian banking system has not been static but has responded to changes in technology, market forces, and the behaviour of regulated institutions. From this analysis, some inferences about general banking principles and policy can be made.

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.

Security authentication for on-line internet banking

The advent of Internet Banking has shown the importance of effective method of authenticating a users in a remote environment. There are many different countenances to contemplate when examining Internet based security. One of the most tried and trusted techniques of protecting the safety of systems and data is to control people's access. The foundation for such measures is authentication. Specifically for Internet banking there is a real need for a way to uniquely identify and authenticate users without the possibility of their authenticity being cloned. This paper proposes a framework concerning how to identify security requirements for Internet Banking.

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

Governance, social responsibility and the banking sector

Banks in both the developed and undeveloped world remain at the core of financial systems and have the unique ability to write cheques against themselves. In light of the essential culture of credit at the heart of banking operations then the structures of corporate governance should especially reflect the supervision and management of risks and credit. This means that committee and management structures as well as staffing commitments revolve around credit and other risks.

Security for internet banking: a framework

As a continually growing financial service of electronic commerce, Internet banking requires the development and implementation of a sound security procedure. This involves designing effective methods via which users can
be authenticated in a remote environment. Specifically for Internet banking there is areal need for away uniquely to identify and authenticate users without the possibility of their authenticity being cloned. Some technologies in use have been presented for meeting the security requirements for national, regional and global Internet banking assurance. However, there has been little research conducted particularly on the creation of secure
and trusted pathways. Concentrates on presenting a security framework for Internet banking based on discovering and defining these pathways in terms of adequate authentication mechanisms. Proposes a framework concerning how to identify security requirements for Internet banking such that the
transactions being conducted are secured within their respective environments.