Corporate restructuring: empirical evidence from the UK

Corporate restructuring is perceived as a challenge to research. Prior studies do not provide conclusive evidence regarding the effects of restructuring. Since there are discernible findings, this research attempts to examine the effects of restructuring events amongst the UK listed firms. The sample firms are listed in the LSE and London AIM stock exchange. Only completed restructuring transactions are included in the study. The time horizon extends from year 1999 to 2003. A three-year floating window is assigned to examine the sample firms. The key enquiry is to scrutinise the ex post effects of restructuring on performance and value measures of firms with contrast to a matched criteria non-restructured sample. A cross sectional study employing logit estimate is undertaken to examine firm characteristics of restructuring samples. Further, additional parameters, i.e. Conditional Volatility and Asymmetry are generated under the GJR-GARCH estimate and reiterated in logit models to capture time-varying heteroscedasticity of the samples. This research incorporates most forms of restructurings, while prior studies have examined certain forms of restructuring. Particularly, these studies have made limited attempts to examine different restructuring events simultaneously. In addition to logit analysis, an event study is adopted to evaluate the announcement effect of restructuring under both the OLS and GJR-GARCH estimate supplementing our prior results. By engaging a composite empirical framework, our estimation method validates a full appreciation of restructuring effect. The study provides evidence that restructurings indicate non-trivial significant positive effect. There are some evidences that the response differs because of the types of restructuring, particularly while event study is applied. The results establish that performance measures, i.e. Operating Profit Margin, Return on Equity, Return on Assets, Growth, Size, Profit Margin and Shareholders' Ownership indicate consistent and significant increase. However, Leverage and Asset Turn Over suggest reasonable influence on restructuring across the sample period. Similarly, value measures, i.e. Abnormal Returns, Return on Equity and Cash Flow Margin suggest sizeable improvement. A notable characteristic seen coherently throughout the analysis is the decreasing proportion of Systematic Risk. Consistent with these findings, Conditional Volatility and Asymmetry exhibit similar trend. The event study analysis suggests that on an average market perceives restructuring favourably and shareholders experience significant and systematic positive gain.

The need for and improvement of budgetary planning in a multinational corporation

The aim of this research is to improve the planning methodology of Dunlop via an analysis of their annual planning system. This was approached via an investigation of how the plans were developed; extensive interviews, which analysed divisional attitudes and approaches to planning; an analysis of forecast accuracy; and participation in the planning system itself. These investigations revealed certain deficiencies in the operating of the system. In particular, little evidence of formal planning could be found, and some divisions were reacting ex post to the market, rather than planning ex ante. The resulting plans tended to lack resilience and were generally unrealistic, partly because of imposed targets. Similarly, because the links between the elements of the system were often inefficient, previously agreed strategies were not always implemented. The analysis of forecast accuracy in the plans revealed divisions to be poor at most aspects of forecasting. Simple naive models often outperformed divisional forecasts, and much of the error was attributed to systematic, and therefore eliminable factors. These analyses suggested the need for a new system which is proposed in the form of Budgetary Planning. This system involves conceptual changes within the current planning framework. Such changes aim to revise tactical planning in order to meet the needs placed on it by. in particular, strategic planning. Budgetary Planning is an innovation in terms of the current planning literature. It is a total system of annual planning aimed at implementing and controlling the iteratively agreed strategies within the current environment. This is achieved by the generation of tactical alternatives, variable funding and concentration of forecast credibility, all of which aid both the realism and the resilience of planning.

Contract specificity and its performance outcomes

Governance theories, such as transaction cost economics, argue that systematic deviations from an attribute–governance alignment should influence performance. This article investigates the performance implications of contract specificity for the procurement of information technology products. The authors argue that parties choose a level of contract specificity that economizes on both the ex ante contracting costs and the ex post transaction costs and that deviations between the observed and the predicted levels of contract specificity are an important determinant of these transaction costs. The authors test the hypotheses using a comprehensive archival data set of information technology transactions and employ a two-step estimation procedure. First, they estimate the “predicted” level of contract specificity, which accounts for key transactional attributes. Second, they study the consequences of deviating from this predicted level of contractual specificity. The results provide the first explicit demonstration of the trade-off between ex ante contracting costs and ex post transaction problems and suggest that parties need to economize jointly on these costs when choosing the governance form.

A firm's capability to calibrate supply chain knowledge-antecedents and consequences

This paper proposes a conceptual model for a firm's capability to calibrate supply chain knowledge (CCK). Knowledge calibration is achieved when there is a match between managers' ex ante confidence in the accuracy of held knowledge and the ex post accuracy of that knowledge. Knowledge calibration is closely related to knowledge utility or willingness to use the available ex ante knowledge: a manager uses the ex ante knowledge if he/she is confident in the accuracy of that knowledge, and does not use it or uses it with reservation, when the confidence is low. Thus, knowledge calibration attained through the firm's CCK enables managers to deal with incomplete and uncertain information and enhances quality of decisions. In the supply chain context, although demand- and supply-related knowledge is available, supply chain inefficiencies, such as the bullwhip effect, remain. These issues may be caused not by a lack of knowledge but by a firm's lack of capability to sense potential disagreement between knowledge accuracy and confidence. Therefore, this paper contributes to the understanding of supply chain knowledge utilization by defining CCK and identifying a set of antecedents and consequences of CCK in the supply chain context.

From the outside in:consumer anti-choice and policy implications in the mobile gaming market

Significant growth in mobile media consumption has prompted a call to better understand the socio-cultural and policy dimensions of consumer choices. Contrary to industry and technology led analysis, this study argues that to guide consumer choice and innovation via regulatory policies requires an understanding of both ex-ante as well as in ex-post consumption conditions. This study examines mobile phone gaming to uncover how consumer anti-choice shapes decision-making as a framework for closely interrogating the ways in which policy concerns impact on consumers' behavior. Through eleven focus groups (n=62), the study empirically identifies voluntary, intentional, and positive consumer anti-choice behaviors all of which impact policy initiatives when consumers, both gamers and non-gamers, self-regulate their behaviors. Findings point to four types of policy implication: regulating the self-regulated, understanding anti-choice, boundary-setting and including the self-excluded. © 2012 Elsevier Ltd.

Business Value of IT Investment: The Case of a Low Cost Airline’s Website

Using the case of a low cost airline company’s website we analyze some special research questions of information technology valuation. The distinctive characteristics of this research are the ex post valuation perspective; the parallel and comparative use of accounting and business valuation approaches; and the integrated application of discounted cash flow and real option valuation. As the examined international company is a strategic user of e-technology and wants to manage and account intangible IT-assets explicitly, these specific valuation perspectives are gaining practical significance.

A computational approach to unbiased districting

In the context of discrete districting problems with geographical constraints, we demonstrate that determining an (ex post) unbiased districting, which requires that the number of representatives of a party should be proportional to its share of votes, turns out to be a computationally intractable (NP-complete) problem. This raises doubts as to whether an independent jury will be able to come up with a “fair” redistricting plan in case of a large population, that is, there is no guarantee for finding an unbiased districting (even if such exists). We also show that, in the absence of geographical constraints, an unbiased districting can be implemented by a simple alternating-move game among the two parties.

A közgazdaságtan metodológiájáról és a matematikai közgazdaságtanról a Neumann-modell ürügyén

A dolgozatban a Neumann-modell lehetséges elméleti és módszertani rokonságát elemezzük annak fényében, hogy mind a neoklasszikusok, mind a klasszikus hagyományokat felélesztő neoricardiánusok a magukénak vallják. Ennek során megvizsgáljuk a klasszikus és a neoklasszikus gazdaságfelfogás, az ex post és az ex ante szemléletű modellek közötti különbségeket, és azt a forradalmi jelentőségű módszertani változást, amely a sok szempontból joggal bírálható modern matematikai közgazdaságtan kialakulásához vezetett. Összevetjük Neumann modelljét az osztrák iskola árbeszámítási elméletével, a Walras­Cassel- és a Schlesinger­Wald-féle modellekkel, illetve a Ricardo, Marx, Dmitriev, Leontief nevekkel fémjelezhető klasszikus vonulat eredményeivel. Rámutatunk arra, hogy Neumann voltaképpen az "igazságos és értelmes gazdaság" ősi ideáját öntötte kora modern fizikájában honos matematikai modell formájába. /===/ The paper investigates the potential theoretical and methodological sources of inspiration of the von Neumann model, in view of the fact that both the neoclassical and the neo-Ricardian economists claim heritage to it. In the course of that the author assesses the main differences of the classical and neoclassical, the ex post and ex ante modeling approaches. He also confronts the von Neumann model with the Walras–Cassel and the Schlesinger–Wald models, and with models worked out in the classical tradition a’la Ricardo, Marx, Dmitriev and Leontief. He concludes that the Neumann-model is, in fact, nothing but a reformulation of a very old belief in a “just and reasonable economic system” based on the modern modeling approach of contemporary physics and mathematics.

A vállalati likviditáskezelés szerepe eszközfedezettel rendelkező hitelszerződésekben. Az alkun alapuló megközelítés eredményei (The role of corporate liquidity management under secured debt financing Results of the bargaining approach)

A szerző azt a kérdést vizsgálja, hogy a vállalat működése során a likvid eszközök mekkora arányát tartsa fenn. A kérdést a finanszírozás szemszögéből veti fel, mivel a hitelezés okozta korlátok jelentősen befolyásolják a likvid eszköz tartalékolásának motivációit. A cikk a vállalkozói-hitelezői információs kapcsolat háromféle esetében mutatja be az eszközfedezettel rendelkező hitelek adósságszolgálatát meghatározó tényezőket. Elsőként a teljes információs viszony melletti stratégiákkal meghatározott adósságszolgálatot vizsgálja, majd a második típusú információs kapcsolatban a nem megfigyelhető vállalkozói erőfeszítéseket feltételezve adja meg az adósságszolgálat fizetésének ex ante és ex post egyensúlyát. Harmadikként, a nem igazolható vállalati adatok feltevése mellett teljes és részleges eszközfedezetre is meghatározza az optimális vállalkozói likviditási politikát, és tárgyalja az itt fennálló ellentéteket. Megmutatja, hogy részleges eszközfedezet mellett 1. újratárgyalható a hitelszerződés, és a stratégiai adósságszolgálatot nem lehet elkerülni, 2. a likviditásoptimalizálásnak nincs ex post Pareto-egyensúlyi megoldása, ugyanis a hitelszerződésben részt vevő felek alkuereje határozza meg a vállalat likviditásának szintjét. / === / This paper investigates what the liquid asset ratio for firms should be. Financing constraints significantly influence motivations for liquidity hoarding. The article shows the determinants of secured debt services for three different information cases of a lender-borrower relationship. First, it examines the strategic debt service under full information, and then, assuming non-observable entrepreneurial efforts, it gives the ex ante and ex post equilibria of the strategic debt service. The third case supposes non-verifiable firm information; this provides the optimal corporate liquidity policy and explains the contrary propositions. It shows that under not fully secured collateral, 1. the debt contract is renegotiable; the lender cannot avoid the strategic debt service, 2. there is no ex post optimal Pareto efficient solution to liquidity policy, because the corporate liquidity ratio is determined by the bargaining power of the partners in the debt contract.

Transferable Utility Games with Uncertainty

We introduce the concept of a TUU-game, a transferable utility game with uncertainty. In a TUU-game there is uncertainty regarding the payoffs of coalitions. One out of a finite number of states of nature materializes and conditional on the state, the players are involved in a particular transferable utility game. We consider the case without ex ante commitment possibilities and propose the Weak Sequential Core as a solution concept. We characterize the Weak Sequential Core and show that it is non-empty if all ex post TUgames are convex.

Transferable Utility Games with Uncertainty

We introduce the concept of a TUU-game, a transferableutilitygame with uncertainty. In a TUU-game there is uncertainty regarding the payoffs of coalitions. One out of a finite number of states of nature materializes and conditional on the state, the players are involved in a particular transferableutilitygame. We consider the case without ex ante commitment possibilities and propose the Weak Sequential Core as a solution concept. We characterize the Weak Sequential Core and show that it is non-empty if all ex post TU-games are convex.

Kornai DRSE-elmélete versus általános egyensúlyelmélet

Kornai János az ex post modellfilozófiát követte a DRSE-elméletében (Kornai, 2014), amely gyökeresen szakít az uralkodó neoklasszikus iskola ex ante feltételrendszerével, a szigorú egyensúlyi keretekkel, és saját premisszákat fogalmaz meg a kapitalista gazdaság működésére. Vagyis a DRSE-elmélet egy nagyon újszerű irányzatot jelöl ki a közgazdasági iskolák között. Az elmélet még csak verbális modellként értelmezhető, tartópillérei a kapitalista rendszer immanens jellemzői: a dinamizmus, a rivalizálás és a többletgazdaság. (Ezek angol megfelelőinek, a Dynamism, Rivalry, Surplus Economy kezdőbetűi szerepelnek az elmélet megnevezésében.) A többletgazdaság, azaz a túlkínálat dominanciáját a monopolista verseny, a kereslet nagyságának bizonytalansága, a schumpeteri innováció, dinamizmus, technikai haladás, teremtő rombolás, valamint a növekvő skálahozadék, a termelők és a szolgáltatók között a piacokért folyó rivalizálás váltja ki. E cikk célkitűzése, hogy megvizsgálja a DRSE-elmélet formális matematikai modellként történő megfogalmazásának lehetőségét. Ebben sajátos utat választottunk: először feltárjuk az általános egyensúlyelmélet (Walras, 1874; Neumann, 1945) irreális ex ante feltevéseit, majd megállapítjuk a DRSE premisszái közötti lehetséges összefüggéseket, amelyekben meghatározó kikötés, hogy csakúgy, mint a biológiai evolúcióban, a piacgazdaság evolúciós folyamataiban sincs fix egyensúlyi állapot, még referenciapontként sem. Az általános egyensúlyelmélet és a DRSE-elmélet egybevetése a schumpeteri evolúciós közgazdaságtan fókuszában történik.

Kornai’s DRSE Theory Versus General Equilibrium Theory

János Kornai’s DRSE theory (Kornai, 2014) follows the ex post model philosophy which radically rejects the ex ante set of conditions laid down by the dominant neoclassical school and the stringent limits of equilibrium, and defines its own premises for the functioning of capitalist economy. In other words, the DRSE theory represents an extremely novel trend among the various schools of economics. The theory is still only a verbal model with the following supporting pillars as the immanent features of the capitalist system: dynamism, rivalry and the surplus economy. (The English name of the theory uses the initial letters of the terms Dynamism, Rivalry, Surplus Economy). The dominance of the surplus economy, that is, oversupply is replaced by monopolistic competition, uncertainty over the volume of demand, Schumpeterian innovation, dynamism, technological progress, creative destruction and increasing return to scale with rivalry between producers and service providers for markets. This paper aims to examine whether the DRSE theory can be formulated as a formal mathematical model. We have chosen a special route to do this: first we explore the unreal ex ante assumptions of general equilibrium theory (Walras, 1874; Neumann, 1945), and then we establish some of the possible connections between the premises of DRSE, which include the crucial condition that just like in biological evolution, there is no fixed steady state in the evolutionary processes of market economy, not even as a point of reference. General equilibrium theory and DRSE theory are compared in the focus of Schumpeterian evolutionary economics.

State subsidy and moral hazard in corporate financing

This paper investigates the impact of state subsidy on the behavior of the entrepreneur under asymmetric information. Several authors formulated concerns about state intervention as it can aggravate moral hazard in corporate financing. In the seminal paper of Holmström and Tirole (1997) a two-player moral hazard model is presented with an entrepreneur initiating a risky scalable project and a private investor (e.g. bank or venture capitalist) providing outside financing. The novelty of our research is that this basic moral hazard model is extended to the case of positive externalities and to three players by introducing the state subsidizing the project. It is shown that in the optimum, state subsidy does not harm, but improves the incentives of the entrepreneur to make efforts for the success of the project; hence in effect state intervention reduces moral hazard. Consequently, state subsidy increases social welfare which is defined as the sum of private and public net benefits. Also, the exact form of the state subsidy (ex-ante/ex-post, conditional/unconditional, refundable/nonrefundable) is irrelevant in respect of the optimal size and the total welfare effect of the project. Moreover, in case of nonrefundable subsidies state does not crowd out private investors; but on the contrary, by providing additional capital it boosts private financing. In case of refundable subsidies some crowding effects may occur depending on the subsidy form and the parameters.

Avaliação de política pública: o ProInfo e sua gestão no município de Parnamirim (2009-2012)

The dissertation assesses aspects of the management of IT in Education Program (ProInfo), in the municipality of Parnamirim-RN. Checks as their management functions, with the following objectives: a) Examine whether the objectives of the activities related to teachers' program are being implemented according to the official documents, b) examine if there is a monitoring program activities as the activities of teachers c) Identify whether teachers develop activities and environments using the technological resources of the internet. The research brings a central issue: How ProInfo is subsidizing the activities of the teachers involved in the program to achieve their goals effectively? As a central hypothesis of this work, to be a general north to the research, we have: the ProInfo establishes a fragile and discontinuous link between the management of the activities of teachers and the goals that he sets. The hypothesis was validated by the analysis of data from field research, when we encounter a series of limiting aspects of program effectiveness at the municipal level. This research was undertaken with managers of state and municipal schools and teachers, using a sample of four schools Parnamirim-RN, in order to include some aspects of program management at the municipal level and effectiveness goals proposed, focusing on teachers who participated in the training. The methodological process consisted of literature review, interviews and documentary analysis carried to the organs responsible for ProInfo statewide (UNDIME/RN ) and municipal level, next to the Municipal Education Parnamirim-RN. Based on data collected from empirical field research, it was found that the ProInfo lacks periodic reviews by the governing bodies of the program, about the actions developed through appropriate instruments, which enable a more realistic view of the results of the program ex post (during or after deployment)