Lessons from the private finance initiative in the UK: benefits, problems and critical success factors

Purpose – This paper summarises the main research findings from a detailed, qualitative set of structured interviews and case studies of private finance initiative (PFI) schemes in the UK, which involve the construction of built facilities. The research, which was funded by the Foundation for the Built Environment, examines the emergence of PFI in the UK. Benefits and problems in the PFI process are investigated. Best practice, the key critical factors for success, and lessons for the future are also analysed. Design/methodology/approach – The research is based around 11 semi-structured interviews conducted with stakeholders in key PFI projects in the UK. Findings – The research demonstrates that value for money and risk transfer are key success criteria. High procurement and transaction costs are a feature of PFI projects, and the large-scale nature of PFI projects frequently acts as barrier to entry. Research limitations/implications – The research is based on a limited number of in-depth case study interviews. The paper also shows that further research is needed to find better ways to measure these concepts empirically. Practical implications – The paper is important in highlighting four main areas of practical improvement in the PFI process: value for money assessment; establishing end-user needs; developing competitive markets and developing appropriate skills in the public sector. Originality/value – The paper examines the drivers, barriers and critical success factors for PFI in the UK for the first time in detail and will be of value to property investors, financiers, and others involved in the PFI process.

Dairy farmers’ attitudes and intentions towards improving dairy cow foot health

Dairy cow foot health is a subject of concern because it is considered to be the most important welfare problem in dairy farming and causes economic losses for the farmer. In order to improve dairy cow foot health it is important to take into account the attitude and intention of dairy farmers. In our study the objective was to gain insight into the attitude and intention of dairy farmers to take action to improve dairy cow foot health and determine drivers and barriers to take action, using the Theory of Planned Behavior. Five hundred Dutch dairy farmers were selected randomly and were invited by email to fill in an online questionnaire. The questionnaire included questions about respondents’ intentions, attitudes, subjective norms and perceived behavioral control and was extended with questions about personal normative beliefs. With information from such a framework, solution strategies for the improvement of dairy cow foot health can be proposed. The results showed that almost 70% of the dairy farmers had an intention to take action to improve dairy cow foot health. Most important drivers seem to be the achievement of better foot health with cost-effective measures. Possible barriers to taking action were labor efficiency and a long interval between taking action and seeing an improvement in dairy cow foot health. The feed advisor and foot trimmer seemed to have most influence on intentions to take action to improve dairy cow foot health. Most farmers seemed to be satisfied with the foot health status at their farm, which probably weakens the intention for foot health improvement, especially compared to other issues which farmers experience as more urgent. Subclinical foot disorders (where cows are not visibly lame) were not valued as important with respect to animal welfare. Furthermore, 25% of the respondents did not believe cows could suffer pain. Animal welfare, especially the provision of good care for the cows, was valued as important but was not related to intention to improve dairy cow foot health. The cost-effectiveness of measures seemed to be more important. Providing more information on the effects of taking intervention measures might stimulate farmers to take action to achieve improvement in dairy cow foot health.

Handbook of research methods and applications in empirical finance

The objective of this book is to present the quantitative techniques that are commonly employed in empirical finance research together with real world, state of the art research examples. Each chapter is written by international experts in their fields. The unique approach is to describe a question or issue in finance and then to demonstrate the methodologies that may be used to solve it. All of the techniques described are used to address real problems rather than being presented for their own sake and the areas of application have been carefully selected so that a broad range of methodological approaches can be covered. This book is aimed primarily at doctoral researchers and academics who are engaged in conducting original empirical research in finance. In addition, the book will be useful to researchers in the financial markets and also advanced Masters-level students who are writing dissertations.

Islamic mutual funds' financial performance and international investment style: evidence from 20 countries

We pursue the first large-scale investigation of a strongly growing mutual fund type: Islamic funds. Based on an unexplored, survivorship bias-adjusted data set, we analyse the financial performance and investment style of 265 Islamic equity funds from 20 countries. As Islamic funds often have diverse investment regions, we develop a (conditional) three-level Carhart model to simultaneously control for exposure to different national, regional and global equity markets and investment styles. Consistent with recent evidence for conventional funds, we find Islamic funds to display superior learning in more developed Islamic financial markets. While Islamic funds from these markets are competitive to international equity benchmarks, funds from especially Western nations with less Islamic assets tend to significantly underperform. Islamic funds’ investment style is somewhat tilted towards growth stocks. Funds from predominantly Muslim economies also show a clear small cap preference. These results are consistent over time and robust to time varying market exposures and capital market restrictions.

The mirror of consumption: celebritization, developmental consumption and the shifting cultural politics of fair trade

This paper explores the shifting cultural politics of development as expressed in the changing narratives and discursive transparencies of fair trade marketing tactics in the UK. Pursued through what I call ‘developmental consumption’ and the increasing celebritization of development, it is now through the global media mega-star that the subaltern speaks. After a more general discussion of the implications of the celebritization of development, specific analysis focuses on two parallel processes complicit in the ‘mainstreaming’ of fair trade markets and the desire to develop fair trade as a product of ‘quality’. The first involves improving the taste of fair trade commodities through alterations in their material supply chains while the second involves novel marketing narratives designed to invoke these conventions of quality through highly meaningful discursive and visual means. The later process is conceptualized through the theoretical device of the shifting ‘embodiments’ of fair trade which have moved from small farmers’ livelihoods, to landscapes of ‘quality’, to increasing congeries of celebrities such as Chris Martin from the UK band Coldplay. These shifts encapsulate what is referred to here as fair trade’s Faustian Bargain and its ambiguous results: the creation of increasing economic returns and, thus, more development through the movement of fair trade goods into mainstream retail markets at the same time there is a de-centering of the historical discursive transparency at the core of fair trade’s moral economy. Here, then, the celebritization of fair trade has the potential to create ‘the mirror of consumption’, whereby, our gaze is reflected back upon ourselves in the form of ‘the rich and famous’ Northern celebrity muddling the ethics of care developed by connecting consumers to fair trade farmers and their livelihoods. The paper concludes with a consideration of development and fair trade politics in the context of their growing aestheticization and celebritization.

Privatisation, empowerment and accountability: What are the policy implications for establishing effective farmer organisations?

Weak institutional development and information flows have constrained the extent to which the small-holder farming sector in developing countries can significantly drive growth and poverty reduction. Thisis despite widely implemented economic liberalisation policies focussing on market efficiency. Farmerorganisations are viewed as a potential means of addressing public and private institutional failure but thishas frequently been limited by inequalities in access to power and information. This article investigatestwo issues that have received little research attention to date: what role downward accountability plays inenabling farmer organisations to improve services and markets, and what influences the extent to whichdownward accountability is achieved. Kenya Tea Development Agency (KTDA), one of the largest farmerorganisations in the world (>400,000 farmers) is examined alongside wider literature. Mixed methodswere used including key informant interviews, and eight months of participant observation followedby a questionnaire survey. The article concludes that without effective downward accountability farmerorganisations can become characterised by institutions and mechanisms that favour elites, restrictedweak coordination and regulation, and manipulated information flows. This in turn reduces individuals’incentives to invest. If farmer organisations are to realise their potential as a means of enabling the small-holder sector to significantly contribute to economic growth and poverty reduction, policy and researchneeds to address key factors which influence accountability including: how to ensure initial processes information of farmer organisations establish appropriate structures and rules; strong state regulation toenhance corporate accountability; transparent information provision regarding actions of farmer organi-sation leaders; and the role independent non-government organisations can play. Consequently attentionneeds to focus on developing means of legitimising rights, building poor people’s capacity to challengeexclusion, and moving from rights to obligations regarding information provision.

Trading death: the implications of annuity replication for the annuity puzzle, arbitrage, speculation and portfolios

Annuities are perceived as being illiquid financial instruments, and this has limited their attractiveness to consumers and their inclusion in financial models. However, short positions in annuities can be replicated using life insurance and debt, permitting long positions in annuities to be offset, or short annuity positions to be created. The implications of this result for the annuity puzzle, arbitrage between the annuity and life insurance markets, and speculation on expected longevity are investigated. It is argued that annuity replication could help reduce the annuity puzzle, improve the price efficiency of annuity markets and promote the inclusion of annuities in household portfolios.

State capitalism and social responsibility in China's banking industry

China’s financial system has experienced a series of major reforms in recent years. Efforts have been made towards introducing the shareholding system in state-owned commercial banks, restructuring of securities firms, re-organising equity of joint venture insurance companies, further improving the corporate governance structure, managing financial risks and ultimately establishing a system to protect investors (Xinhua, 2010). Financial product innovation, with the further opening up of financial markets and the development of the insurance and bond market, has increased liquidity as well as reduced financial risks. The U.S. subprime crisis indicated the benefit of financial innovations for the economy, but without proper control, they may lead to unexpected consequences. Kirkpatrick (2009) argues that failures and weaknesses in corporate governance arrangements and insufficient accounting standards and regulatory requirements attributed to the financial crisis. Similar to the financial crises of the last decade, the global financial crisis which sparked in 2008, surfaced a variety of significant corporate governance failures: the dysfunction of market mechanisms, the lack of transparency and accountability, misaligned compensation arrangements and the late response of government, all which encouraged management short-termism, poor risk management, as well as some fraudulent schemes. The unique characteristics of the Chinese banking system are an interesting point for studying post-crisis corporate governance reform. Considering that China modelled its governance system on the Anglo-American system, this paper examines the impact of the financial crisis on corporate governance reform in developed economies, and particularly, China’s reform of its financial sector. The paper further analyses the Chinese government’s role in bank supervision and risk management. In this regard, the paper contributes to the corporate governance literature within the Chinese context by providing insights into the contributing factors to the corporate governance failure that led to the global financial crisis. It also provides policy recommendations for China’s policy makers to seriously consider. The results suggest a need for the re-examination of corporate governance adequacy and the institutionalisation of business ethics. The paper’s next section provides a review of China’s financial system with reference to the financial crisis, followed by a critical evaluation of a capitalistic system and a review of Anglo-American and Continental European models. It then analyses the need for a new corporate governance model in China by considering the bank failures in developed economies and the potential risks and inefficiencies in a current State controlled system. The paper closes by reflecting the need for Chinese policy makers to continually develop, adapt and rewrite corporate governance practices capable of meeting the new challenge, and to pay attention to business ethics, an issue which goes beyond regulation.

The post-financial crisis challenges for corporate governance and banking reform in China

The purpose of this paper is to review the impact of the global financial crisis on banking reform in China. The significant doubt concerning the efficiencies of Anglo-American model of corporate governance has raised a critical political question amongst scholars and practitioners as to whether China should continue to follow the U.K.-U.S. path in relation to financial reform. This conceptual paper provides an insightful review of the corporate governance literature and regulatory reports. After examining the fundamental limitations of the laissez-faire philosophy that underpins the neo-liberal model of capitalism, which promotes greater liberalization and less control, the paper considers the risks in opening China’s financial markets and relaxing monetary and fiscal policies. A critique of shareholder-capitalism is outlined in relation to the German’s “social market economy” styled capitalism. Through such analysis the paper explores a number of implications for China to consider in terms of developing a new and sustainable corporate governance model applicable to the Chinese context.

Operating models for a multi-polar world: balancing global integration and local responsiveness

Purpose – Multinationals have always needed an operating model that works – an effective plan for executing their most important activities at the right levels of their organization, whether globally, regionally or locally. The choices involved in these decisions have never been obvious, since international firms have consistently faced trade‐offs between tailoring approaches for diverse local markets and leveraging their global scale. This paper seeks a more in‐depth understanding of how successful firms manage the global‐local trade‐off in a multipolar world. Design methodology/approach – This paper utilizes a case study approach based on in‐depth senior executive interviews at several telecommunications companies including Tata Communications. The interviews probed the operating models of the companies we studied, focusing on their approaches to organization structure, management processes, management technologies (including information technology (IT)) and people/talent. Findings – Successful companies balance global‐local trade‐offs by taking a flexible and tailored approach toward their operating‐model decisions. The paper finds that successful companies, including Tata Communications, which is profiled in‐depth, are breaking up the global‐local conundrum into a set of more manageable strategic problems – what the authors call “pressure points” – which they identify by assessing their most important activities and capabilities and determining the global and local challenges associated with them. They then design a different operating model solution for each pressure point, and repeat this process as new strategic developments emerge. By doing so they not only enhance their agility, but they also continually calibrate that crucial balance between global efficiency and local responsiveness. Originality/value – This paper takes a unique approach to operating model design, finding that an operating model is better viewed as several distinct solutions to specific “pressure points” rather than a single and inflexible model that addresses all challenges equally. Now more than ever, developing the right operating model is at the top of multinational executives' priorities, and an area of increasing concern; the international business arena has changed drastically, requiring thoughtfulness and flexibility instead of standard formulas for operating internationally. Old adages like “think global and act local” no longer provide the universal guidance they once seemed to.

A review of Islamic mutual funds’ financial performance and investment style in Muslim and non-Muslim countries

Islamic finance has grown beyond its reputation of providing small-scale banking options and now provides investment and financing options for complex large-scale commercial transactions. Islamic investments are one area that has attracted the attention of investors due to its performance, especially during the economic downturn. The Shari’ah compliance nature of Islamic funds provides an opportunity for those Muslim investors to be part of the global investment sector who have previously been reluctant to invest in conventional mutual funds. The fact that the funds’ managers are prohibited from investing in activities such as weapons production, alcohol production and interest-bearing finance operations, makes Islamic mutual funds also attractive for those Non-Muslim investors who wish to invest ethically. Today there are hundreds of Islamic equity indices offered by Dow Jones, FTSE, MSCI and S&P. Despite the growing importance of Islamic funds, there have been limited studies exploring the performance of Islamic funds worldwide. Due to very limited data sets and not too rigorous analytical methods, these existent studies have neither investigated Islamic funds’ financial performance in noticeable detail nor analysed the investment style of more than six funds. For instance, relevant questions such as the financial performance of Islamic mutual funds’ beyond their investment styles or a difference in performance between funds from Muslim and non-Muslim countries have nearly not been investigated at all. Very recently, a study by Hoepner, Rammal and Rezec (2011) analysed the financial performance and investment style of 262 Islamic equity funds from 20 countries in five regions (Africa, Asia-Pacific, Europe, Gulf Cooperative Council-GCC, and North America). As comparison, previous studies did not even analyse 60 funds. Hoepner et al.’s study sampled a period of two decades and was therefore able to test the performance of the funds during economic booms as well as economic downturns. The findings of the study provide new insights into the performance of Islamic mutual funds in Muslim and Western markets and during financial crisis.

Basic Income, Republican Freedom, and Effective Market Power

This article examines republican arguments for a basic income that turn on a right to exit the labour market. It gives criteria for the maintenance of republican freedom in markets, arguing that a right to exit or effective market power will guarantee republican freedom in markets. The article then considers whether a basic income is either sufficient or necessary to protect republican freedom both in labour markets and elsewhere. If a basic income is necessary to protect republican freedom in the labour market, I argue it is not sufficient to protect that freedom elsewhere. If citizens lack the means to maintain their republican freedom in the labour market, then there may be other spheres of life where they are vulnerable to subordination, whether or not they have a basic income. Some sociological evidence on cultural consumption patterns is presented.

Non-competitive markets

Among all the paradigms in economic theory, the theoretical predictions of oligopoly were the first to be examined in the laboratory. In this chapter, instead of surveying all the experiments with few sellers, we adopt a narrower definition of the term “oligopoly”, and focus on the experiments that were directly inspired by the basic oligopolistic models of Cournot, Bertrand, Hotelling, Stackelberg, and some extensions. Most of the experiments we consider in this chapter have been run in the last three decades. This literature can be considered as a new wave of experimental works aiming at representing basic oligopolistic markets and testing their properties. The chapter is divided into independent sections referring to different parts of the oligopolistic theory, including both monopoly as well as a number of extensions of the basic models, which have been chosen with the aim of providing a representative list of the relevant experimental findings.