Political Risk in Credit Evaluation: Empirical Studies and Survey Results

Financing trade between economic agents located in different countries is affected by many types of risks, resulting from incomplete information about the debtor, the problems of enforcing international contracts, or the prevalence of political and financial crises. Trade is important for economic development and the availability of trade finance is essential, especially for developing countries. Relatively few studies treat the topic of political risk, particularly in the context of international lending. This thesis explores new ground to identify links between political risk and international debt defaults. The core hypothesis of the study is that the default probability of debt increases with increasing political risk in the country of the borrower. The thesis consists of three essays that support the hypothesis from different angles of the credit evaluation process. The first essay takes the point of view of an international lender assessing the credit risk of a public borrower. The second investigates creditworthiness assessment of companies. The obtained results are substantiated in the third essay that deals with an extensive political risk survey among finance professionals in developing countries. The financial instruments of core interest are export credit guaranteed debt initiated between the Export Credit Agency of Finland and buyers in 145 countries between 1975 and 2006. Default events of the foreign credit counterparts are conditioned on country-specific macroeconomic variables, corporate-specific accounting information as well as political risk indicators from various international sources. Essay 1 examines debt issued to government controlled institutions and conditions public default events on traditional macroeconomic fundamentals, in addition to selected political and institutional risk factors. Confirming previous research, the study finds country indebtedness and the GDP growth rate to be significant indicators of public default. Further, it is shown that public defaults respond to various political risk factors. However, the impact of the risk varies between countries at different stages of economic development. Essay 2 proceeds by investigating political risk factors as conveivable drivers of corporate default and uses traditional accounting variables together with new political risk indicators in the credit evaluation of private debtors. The study finds links between corporate default and leverage, as well as between corporate default and the general investment climate and measeures of conflict in the debtor country. Essay 3 concludes the thesis by offering survey evidence on the impact of political risk on debt default, as perceived and experienced by 103 finance professionals in 38 developing countries. Taken together, the results of the thesis suggest that various forms of political risk are associated with international debt defaults and continue to pose great concerns for both international creditors and borrowers in developing countries. The study provides new insights on the importance of variable selection in country risk analysis, and shows how political risk is actually perceived and experienced in the riskier, often lower income countries of the global economy.

Reviewing the evidence on nursing record systems

Urquhart, C. & Currell, R. (2005). Reviewing the evidence on nursing record systems. Health Informatics Journal, 11(1), 33-44. First appeared as a paper in iSHIMR2004, Proceedings of the Ninth International Symposium on Health Information Management Research, 15-17 June 2004, Sheffield, UK.

Management compensation systems in MNCs and domestic firms. Cross-national empirical evidence

• This is a study of the relationship between institutional settings and managerial compensation systems, based on extensive cross-national survey evidence. • We compare differences in practices between Multinational Corporations (MNCs) and domestic firms across a range of capitalist archetypes. • We find that MNCs are more likely to promote compensation systems that incentivise managers in line with organisational performance compared to domestic firms. Our findings also reveal persistent diversity reflecting firm type and institutional setting. We find that the gap between MNCs and domestic firms in terms of the usage of incentive-related compensation is less pronounced in Liberal Market Economies than in other settings. This suggests that it is a combination of being an MNC and the specific home locale that moulds approaches to managerial compensation. This reflects considerable hybridisation of practices within and between settings.

Environmental quality in residential areas : a social survey approach to improvement priorities

The research is concerned with the measurement of residents' evaluations of the environmental quality of residential areas. The research reflects the increased attention being given to residents' values in planning decisions affecting the residential environment. The work was undertaken in co-operation with a local authority which was in the process of revising its housing strategy, and in particular the priorities for improvement action. The study critically examines the existing evidence on environmental values and their relationship to the environment and points to a number of methodological and conceptual deficiencies. The research strategy developed on the basis of the research review was constrained by the need to keep any survey methods simple so that they could easily be repeated, when necessary, by the sponsoring authority. A basic perception model was assumed, and a social survey carried out to measure residents' responses to different environmental conditions. The data was only assumed to have ordinal properties, necessitating the extensive use of non-parametric statistics. Residents' expressions of satisfaction with the component elements of the environment (ranging from convenience to upkeep and privacy) were successfully related to 'objective' measures of the environment. However the survey evidence did not justify the use of the 'objective' variables as environmental standards. A method of using the social survey data directly as an aid to decision-making is discussed. Alternative models of the derivation of overall satisfaction with the environment are tested, and the values implied by the additive model compared with residents' preferences as measured directly in the survey. Residents' overall satisfactions with the residential environment were most closely related to their satisfactions with the "Appearance" and the "Reputation" of their areas. By contrast the most important directly measured preference was "Friendliness of area". The differences point to the need to define concepts used in social research clearly in operational terms, and to take care in the use of values 'measured' by different methods.

The significance of the resident’s knowledge management in managing the residential property

Most commonly, residents are always arguing about the satisfaction of sustainability and quality of their high rise residential property. Often, all the shortcomings and weaknesses will be blamed on the developers without considering the lack of knowledge management from the residents themselves. It is important, therefore, to show that knowledge management of the residents should be taken into account in relation to the satisfactory and the quality of the high rise residential property. This paper aims to discuss the resident’s knowledge management level of the high rise residential property in showing that resident’s knowledge management is really important to maintain the property at least. To evaluate this situation, the questionnaire surveys are being conducted. The paper analyses and structures the social science research on the importance of knowledge as a resource. The survey evidence demonstrates that, the resident’s knowledge management level was highly related in having high quality and sustainable high rise residential property in Johor Bahru.

Google, online search and consumer confusion in Australia

The legality of the operation of Google’s search engine, and its liability as an Internet intermediary, has been tested in various jurisdictions on various grounds. In Australia, there was an ultimately unsuccessful case against Google under the Australian Consumer Law relating to how it presents results from its search engine. Despite this failed claim, several complex issues were not adequately addressed in the case including whether Google sufficiently distinguishes between the different parts of its search results page, so as not to mislead or deceive consumers. This article seeks to address this question of consumer confusion by drawing on empirical survey evidence of Australian consumers’ understanding of Google’s search results layout. This evidence, the first of its kind in Australia, indicates some level of consumer confusion. The implications for future legal proceedings in against Google in Australia and in other jurisdictions are discussed.

Making 'party identification' more versatile: operationalising the concept for the multiparty setting

The conventional operationalisation of the concept of party identification is not appropriate for the multiparty setting. I offer new measures that facilitate multiple, and negative as well as positive, identities. Using survey evidence from Northern Ireland, these new measures are validated in a number of ways and their role in a comprehensive model of voting is illustrated.

Beyond managerial talent: ‘key group’ identification and differential compensation practices in multinational companies

With the maturation of strategic human resource management scholarship, there appears to be a greater call to move from monolithic workforce management to a more strategic and differentiated emphasis on employees with the greatest capacity to enhance competitive advantage. There has been little consideration in the literature as to whether organizations formally identify key groups of employees based on their impact on organizational learning and core competences. Using survey evidence from 260 multinational companies (MNCs), this paper explores the extent to which key groups of employees are formally recognized and whether they are subject to differential compensation practices. The results demonstrate that just in excess of half of these MNCs identify a key group. There was considerable differentiation in the compensation practices between these key groups, managers and the largest occupational group in the workforce. The results give rise to questions worthy of future investigation, namely whether the differentiated approaches used lead to improved performance outcomes.

Structural spoilers or structural supports? Unionism and the strategic integration of HR functions

The strategic integration of the human resource (HR) function is regarded as crucial in the literature on (strategic) human resource management ((S)HRM). Evidence on the contextual or structural influences on this integration is, however, limited. The structural implications of unionism are particularly intriguing given the evolution of study of the employment relationship. Pluralism is typically seen as antithetical to SHRM, and unions as an impediment to the strategic integration of HR functions, but there are also suggestions in the literature that unionism might facilitate the strategic integration of HR. This paper deploys large-scale international survey evidence to examine the organization-level influence of unionism on this strategic integration, allowing for other established and plausible influences. The analysis reveals that exceptionally, where the organization-level role of unions is particularly contested, unionism does impede the strategic integration of HR. However, it is the predominance of the facilitation of the strategic integration of HR by unionism which is most remarkable.

Varieties of capitalism and investments in human capital

This paper explores the relationship between national institutional archetypes and investments in training and development. A recent trend within the literature on comparative capitalism has been to explore the nature and extent of heterogeneity within the coordinated market economies (CMEs) of Europe. Based on a review of the existing comparative literature on training and development, and comparative firm-level survey evidence of differences in training and development practices, we both support and critique existing country clusters and argue for a more nuanced and flexible categorization.

Direct involvement, partnership and setting: a study in bounded diversity

This paper brings a comparative aspect to the analysis of direct involvement as the foundation for partnership. It considers how various forms of direct involvement can represent components of a broader partnership paradigm of people management, or a limited shallow partnership concession to facilitate the diffusion of top-down human resource management policies. Through the use of survey evidence, we explore the settings in which involvement is more likely to be encountered. Contrary to predictions in much of the literature as to their universal applicability, we found that they tended to be concentrated in specific locales, organisational types and sectors, as part and parcel of wider cooperative production paradigms; in practical terms, if involvement is a prerequisite for meaningful partnership, then the latter is more likely to be encountered in more coordinated varieties of capitalism. This does not suggest, however, that ‘shallow’ or instrumentalist partnerships do not occur, or that in infertile ground genuine partnerships are not possible. On one hand, national variations encountered were broadly on the lines of the literature on comparative capitalism. On the other hand, there was much diversity within national settings; we identify the contexts in which such engagement is more or less likely and consider the implications.

Structural spoilers or structural supports? Unions and the strategic integration of HR functions

The strategic integration of the human resource (HR) function is regarded as crucial in the literature on (strategic) human resource management ((S)HRM). Evidence on the contextual or structural influences on this integration is, however, limited. The structural implications of unionism are particularly intriguing given the evolution of study of the employment relationship. Pluralism is typically seen as antithetical to SHRM, and unions as an impediment to the strategic integration of HR functions, but there are also suggestions in the literature that unionism might facilitate the strategic integration of HR. This paper deploys large-scale international survey evidence to examine the organization-level influence of unionism on this strategic integration, allowing for other established and plausible influences. The analysis reveals that exceptionally, where the organization-level role of unions is particularly contested, unionism does impede the strategic integration of HR. However, it is the predominance of the facilitation of the strategic integration of HR by unionism which is most remarkable.

Institutions, unionization and voice: the relative impact of context and actors on firm level practice

Trade unions provide a voice in the way firms are run, an input into reward systems and increased security of employment. But these vary with national context. Using transnational survey evidence, this article explores the relative impact of setting, and of unions and collective bargaining, on these issues. It is found that, irrespective of context, organizations are significantly more likely to make use of compulsory redundancies in the absence of unions and collective bargaining. However, in other areas, the impact of unions appeared less pronounced than that of the wider context. The article explores the reasons behind this, and the broader policy implications thereof.

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.