bluuebunny/crossref_metadata_2025 huggingface dataset:
Court decision on hedge fund registration requirements derails SEC fraud case
Authors: Machtinger Steven N.
Published: September 2007

Purpose

The purpose of this paper is to illustrate through a recent Order Dismissing Proceedings against a San Francisco hedge fund manager the interplay between the SEC's regulation and enforcement programs and the way that a patient response to SEC enforcement allegations can sometimes be rewarded.

Design/methodology/approach

The paper explains the background to the Order Instituting Proceedings in the Global Crown case, how the Goldstein decision led to the Order Dismissing Proceedings, and the implications of that ODP.

Findings

The paper finds that in the future, as a result of the Goldstein decision, there will be fewer instances in which fraudulent statements by hedge fund managers to investors will be discovered, because the managers will not be registered and the SEC will therefore not have access to their records through the examination process; and, until a recently approved rule becomes effective, the SEC's remedies will be limited.

Practical implications

The result in the Global Crown case shows how respondents can sometimes benefit from a patient approach in responding to SEC enforcement allegations. If the respondents had settled the case when it was filed, the matter would have been closed before the Goldstein decision ripped out the legal premise of the SEC's enforcement action.

Originality/value

The paper presents a practical, interpretive guide to a recent SEC decision by an experienced lawyer who represents and advises broker‐dealers and other financial institutions on securities litigation, compliance and regulatory enforcement matters.
Final Section 409A regulations and their effect on offshore hedge fund deferral arrangements
Authors: Shea Fries Elizabeth , Scerbak Adrienne A. , Tse Marian A. , Webster Scott A.
Published: September 2007

Purpose

The purpose of this paper is to explain restrictions on nonqualified deferred compensation arrangements contained in Section 409A of the Internal Revenue Code.

Design/methodology/approach

The study explains the background to Section 409A, how Section 409A applies to hedge funds, how deferral elections may be made, permissible payment events, and back‐to‐back deferral arrangements.

Findings

The paper finds that, to avoid current taxation, the penalty tax, and interest, a deferral arrangement must comply with the technical provisions of Section 409A. These provisions generally govern the timing of initial and subsequent deferrals, the form and time of distributions, and the acceleration of distributions under certain circumstances.

Practical implications

Section 409A places specific requirements on certain deferred amounts which, if not followed, will cause the amounts to be subject to current taxation and a 20 percent penalty tax plus interest charges.

Originality/value

The paper is a practical guide written by a team of lawyers with experience in advising hedge funds on the full range of legal issues that affect their business and investments.
China introduces margin trading and securities lending
Authors: Yang TieCheng , Wang Lucas
Published: September 2007

Purpose

The aim of this paper is to explain the details of a trial program in China to introduce margin trading and securities lending.

Design/methodology/approach

The paper describes eligibility requirements for securities companies and their clients; accounts for margin trading and securities lending to be opened by the securities company; contracts between a securities company and its client that must be entered into; collateral a client is required to provide to the securities company; a client's rights and entitlement with respect to collateral; internal rules and precautions required of the securities company; the securities company's risk control requirements; and the possible impact of the new program on foreign investors.

Findings

The paper finds that the conduct of margin trading and securities lending in China is highly regulated. There are significant requirements with respect to separate accounts, collateral, contracts, and controls. Before providing margin trading or securities lending to clients, securities companies are required to carefully assess and determine the identity, creditworthiness, assets, income, securities investment experience, investment preferences, and risk appetite of their clients. The securities company must explain how the margin trading and securities lending will be conducted and the content of the contracts to the client, and require the client to sign a transaction risk disclosure letter that specifies certain risks involved in such business. A client may only maintain margin trading facilities and securities lending business with one securities company in China.

Originality/value

The paper provides a practical guide to a new program by lawyers who are experts in Chinese securities regulations.
Path to investment success lined with hidden traps
Authors: Borg Joe
Published: September 2007

Purpose

The purpose of this paper is to remind investment company compliance professionals of common traps for unwary investors, to emphasize the importance of detecting and preventing fraud in the marketplace that may affect individual investors, and to review basic investor rights and the importance of suitability for investment company clients.

Design/methodology/approach

The paper explains the constant danger of investment fraud, lists the North American Securities Administrators Association's (NASAA's) top ten investor traps for 2007, reviews questions investment sales professionals should ask themselves concerning the suitability of every investment for a given client, and lists rights to which investors should be entitled before they make every investment.

Findings

The paper finds that the path to safe investing is littered with pitfalls likely to catch unwary investors. Investment fraud is on the rise. Before offering any investment, sales professionals should ask themselves several key questions. Investors can avoid becoming trapped in a fraudulent or unsuitable investment by recognizing that they have certain rights and demanding that these rights be upheld before they invest.

Practical implications

Compliance professionals should remember that the underlying purpose of most state and federal regulations governing investment companies is centered on investor protection and concerned with investment suitability and fraud prevention.

Originality/value

The paper provides useful information with regard to the pitfalls likely to catch investors who want to make successful investments.
Making a security and compliance investment: how to value what you pay for
Authors: Mazer Murray
Published: September 2007

Purpose

The purpose of the paper is to emphasize the need for technology and people investments in security and compliance and to show the cost of not making such investments.

Design/methodology/approach

The paper describes direct and indirect costs of database intrusions and data thefts, shows ways in which the cost of technology can be justified, and shows examples of how return on investment (ROI) can be calculated.

Findings

The paper finds that, in today's data‐sensitive climate, automation of stronger data protection practices has become an essential activity.

Originality/value

This paper is a practical reminder that security does not come without investment in appropriate automated systems along with related policies and other safeguards.
Buyback trading of open market share repurchase firms and the return volatility decline
Authors: Kim Jaemin
Published: September 2007

Purpose

The paper seeks to examine changes in daily return volatility associated with open market share repurchases.

Design/methodology/approach

Univariate analyses, control sample analyses, and multiple regression analyses are employed to explore relations between daily return volatility and a number of variables.

Findings

This study finds evidence that an open market share repurchase firm, by actively buying back its shares when the share price falls, reduces daily return volatility. The results suggest that it is the subsequent actual buyback trading activity, not the announcement, that is significantly negatively associated with changes in daily return volatility. CAPM beta, a measure of systematic risk, decreases only when the firm is in the market actively repurchasing its shares.

Originality/value

To the best of the author's knowledge, this study is probably the first to connect changes in daily return volatility to actual buyback trading activities of share repurchase announcing firms. Changes in daily return volatility, or total risk, not only affect systematic risk, but also are important to underlying option holders, arbitrageurs, and investors who hold undiversified portfolios.
The role of indemnification agreements and legal liability in railroad disasters
Authors: Walker Thomas J. , Thiengtham Dolruedee , Ozocak Onem , Barabanov Sergey S.
Published: September 2007

Purpose

The study aims to examine the stock price performance of publicly owned railroad companies following severe railroad accidents that resulted in the loss of human lives and/or hazardous material spills. The focus is on legal liability considerations as one of the primary factors that drives a firm's abnormal performance following a given accident.

Design/methodology/approach

This paper employs a sample of 97 railroad accidents that occurred between January 1967 and December 2006 and involved equipment (tracks and/or locomotives) owned by publicly traded US and Canadian railroad companies. The stock price reaction of the affected firms is examined following these disasters and a series of univariate and multivariate tests is used to investigate whether differences in abnormal returns following a given accident can be related to various factors that characterize the affected firm or the accident it was involved in.

Findings

The results suggest that legal liability considerations are one of the primary factors that determine a company's stock price reaction following a railroad disaster. Specifically, it is observed that firms that are likely to be sued in connection with an accident tend to incur larger stock price losses. On the other hand, it is found that firms that are protected through indemnification agreements suffer only insignificant price declines, even if initial accident reports hold them responsible for causing the accident.

Originality/value

The paper extends the prior literature on the stock market's reaction to firm‐specific catastrophic events. While there are a number of studies that examine the financial consequences of aviation disasters, there is to the authors' knowledge only one prior study that performs a similar analysis for railroad accidents.
The use of GARCH models for the calculation of minimum capital risk requirements
Authors: Floros Christos
Published: September 2007

Purpose

The paper seeks to explain volatility and risk (VaR) modelling using data from international financial markets, and particularly to evaluate the performance of minimum capital risk requirements (MCRR) estimates in an out‐of‐sample period using the bootstrapping approach.

Design/methodology/approach

This paper captures financial time series characteristics by employing the GARCH(p,q) model, and its EGARCH, threshold GARCH (TGARCH), asymmetric component (AGARCH) and component GARCH (CGARCH) extensions. Furthermore, under the bootstrapping approach, the MCRR for long and short positions over five‐day, ten‐day and 15‐day horizon periods is calculated. This paper uses daily data from the USA (Dow Jones, NASDAQ) and European (ASE, Greece; DAX, Germany; FTSE‐100, UK) financial markets.

Findings

The results show that higher capital requirements are necessary for a short position since a loss is more likely than for a long position.

Research limitations/implications

Future research should examine the performance of multivariate time series models when using daily and monthly returns of international mature and emerging markets. Consequently, it is of interest to consider multivariate models to describe the volatility and market risk of several time series jointly, to exploit possible linkages that exist.

Practical implications

The findings are strongly recommended to risk managers and modellers dealing with US and European financial markets.

Originality/value

The contribution of this paper is to provide new evidence from international equity markets to the modelling of financial time series by explaining volatility and VaR (MCRR) estimates in the US and European markets. This paper explains the functioning of financial markets and the process by which financing decisions are reached through risk modelling.
Dealing with panel data in accounting and managerial finance research
Authors: O'Connell Vincent
Published: September 2007

Purpose

Given the importance of panel datasets in contemporary accounting and managerial finance research, the objective of this paper is to provide practical guidance for researchers who are inexperienced in dealing with panel estimation methodologies.

Design/methodology/approach

The paper presents and implements a set of procedures designed to establish whether or not pooled estimation is a viable proposition in a given setting. The paper also explores the suitability of alternative estimation methodologies given the results from these test procedures. To illustrate the key concepts the paper utilises a simple model of the relationship between UK directors' cash compensation and three explanatory variables: accounting earnings; stock returns; and firm growth. This model is used solely for illumination purposes and the paper does not seek to contribute to the compensation literature.

Findings

The results demonstrate the potentially misleading inference in panel settings, which can arise from: pooled OLS, where there is parameter heterogeneity; and firm‐specific OLS, when the impact of unobservable factors is likely to cause omitted variables difficulties.

Practical implications

The paper provides practical insights to researchers with respect to the appropriate ways of utilising the considerable benefits of panel estimation methodologies while simultaneously avoiding common errors.

Originality/value

This study presents guidance in a relatively non‐technical manner on an issue which has not received sufficient attention in the accounting and managerial finance literature to date, namely the procedures to follow in order to choose appropriate estimation methodologies when dealing with panel datasets.
Trend of knowledge management in China: challenges and opportunities
Authors: Peng Jian , Li‐Hua Richard , Moffett Sandra
Published: September 2007

Purpose

The purpose of this paper is to explore challenges and opportunities in knowledge management (KM) research trends in China.

Design/methodology/approach

The literature review presents the status quo of China KM research from a world‐wide perspective and China's economy today. Then the paper explains theoretical analysis of KM development and future trend in the West. The third part of literature review addresses the debate of KM practices followed by the way how KM trend is discussed in Western research. Empirical evidences from the journal literature, the web sites of consultancy companies, and in the presentation of research centres are examined. A triangulated methodology include data from two well known management database searching results for “China” and “Knowledge Management”; two KM surveys in China and other web site and journals.

Findings

The paper is an initial exploration of the KM research trends in China. The research explains the opportunities and challenges facing KM researchers and provides useful guidance for KM practice in China. In general, China has relatively newly developed KM awareness. The importance of KM, however, has not yet been fully explored in research. One the one hand, the lack of access to China practitioners, the scarceness of related comparative study and the arguable KM domain are three major reasons that lead to insufficient research in KM. On the other hand, given the rapid development of China's economy today, there are questions and phenomena with specific Chinese characters need to be examined from KM perspective. Two major challenges of China economy, i.e. reforming in the process of development, and the privatization as well as the regional difference need to be reflected in China KM research. Comparative approaches in the research are needed. Although KM is arguably undergoing fast development in recently years and China is becoming one of the important spotlights, China‐related KM research is still at its very early stage. Challenges and opportunities are presented for further research guidance.

Originality/value

This paper shows that KM research in China has its own characters if compare with the West. Future directions and opportunities for China‐related KM researches are discussed by a triangulated approach. The findings present future trends of KM research in China that help practitioner to reinforce KM practice. This paper suggests important areas that researchers need to address as new challenges and opportunities in the KM trends in China context.
Comparative analysis of managerial values in the USA and China
Authors: Chinta Ravi , Capar Nejat
Published: September 2007

Purpose

China, one of the fastest growing economies in the world, has become a major trading partner with the USA. However, trading with Chinese involves major cultural barriers. The Chinese and US cultures differ widely in their values, which produces different attitudes and behaviors. This study purports to add to the existent knowledge on the managerial values in the USA and China by empirically comparing and contrasting these values along several dimensions.

Design/methodology/approach

This empirical investigation examines the differences in managerial values between US and Chinese managers through independent sample t‐tests based on survey responses from 1,741 US and 982 Chinese managers.

Findings

The findings indicate that significant cultural differences exist between the two samples. Results show that US managers are more individualistic than their Chinese counterparts. The managerial values of the US sample are also characterized by lower power distance, uncertainty avoidance, and work ethics than the Chinese sample.

Practical implications

The findings provide support for the conventional wisdom regarding the differences between the US and Chinese cultures.

Originality/value

The large sample sizes in the research study provide strong empirical support to existent theory.
R&D and economic growth in China on the basis of data envelopment analysis
Authors: Hu Baomin , Wang Lili , Yu Xinkai
Published: September 2007

Purpose

This paper aims to explore the research and development (R&D) structure and the effect which R&D may have on economic growth in Hebei Province, PRC. Through the comparison of R&D efficiency in Hebei and that of seven other regions (with top economic performance in China), it tries to find out the right ways of improving R&D performance, in order to increase its contribution to economic growth. It concludes with practical suggestions for future R&D management in Hebei, and it also offers a useful evaluation framework for other regions.

Design/methodology/approach

Based on the analysis of R&D census in 2000 in China and an investigation of 532 large and medium enterprises in Hebei Province, this paper presents a data envelopment analysis (DEA) framework to measure the effects of R&D on economic growth in China. Regional comparisons of R&D efficiencies are also carried out.

Findings

Applying the DEA model, this paper finds out the shortcomings of R&D structure in Hebei Province as well as problems in R&D efficiency compared to some other regions. The R&D scale of Hebei is still at the stage of increasing returns to scale, and its ratio of basic research: applied research: development should be adjusted to 2.9:10.4:86.7 instead of 5.7:2.6:67.6. Through the investigation of 532 large and medium enterprises between 1998 and 2000 in Hebei, it was also found that the indigenous innovation is currently the main pattern of Hebei's enterprises.

Originality/value

With the DEA model, this paper presents a useful evaluation model on R&D structure and contribution to economic growth in Hebei Province, PRC. A comparison of regional R&D efficiencies provides an important guideline for local governments with respect to future policy making. The framework used in Hebei Province in this paper offers a good reference for some other regions as well.
Relationship between the development of Chinese non‐state‐owned enterprises and its cultivation of scientific and technological competence
Authors: Du Lanying , Hou Jundong , Lü Jun
Published: September 2007

Purpose

To study and validate the relationship between the development of Chinese non‐state‐owned enterprise (Chinese non‐SOE), and cultivation of scientific and technological competence empirically.

Design/methodology/approach

Correlation analysis in SPSS is used to analyze the correlation between Chinese non‐SOE and cultivation of scientific and technological competence based on the statistic data released by China Statistical Bureau from 1987 to 2005. Furthermore, their relationship is validated by means of Granger causality test in Eviews 3.0.

Findings

This paper finds serial GDP of Chinese non‐SOE is a first difference stationary, while serial total funds of S&T activities of Chinese non‐SOE is a second difference stationary. After they are adjusted to be difference stationary, we find that there is not only a positive correlation, but also a bilateral Granger causality between the two variables.

Practical implications

From the point of view of a practitioner engaging in China trade, this study suggested that when all level governmental departments and all Chinese non‐SOE establish economic development strategies and policies for cultivating scientific and technological competence, the interaction relationship must be taken into consideration in order to avoid negative impact on the sustainable development of Chinese non‐SOE.

Originality/value

This study provides reference and benchmark to Chinese non‐SOE's development and will help to enhance its international competence.
Knowledge management in the Chinese public sector: empirical investigation
Authors: Cong Xiaoming , Li‐Hua Richard , Stonehouse George
Published: September 2007

Purpose

This paper aims to examine knowledge management (KM) processes and its implementation in the public sector in China and seeks to identify success factors that influence KM and attempts to address various key issues in the process in a hope to raise awareness of KM as a potential solution to improve the performance in the public sector.

Design/methodology/approach

A case study and research experience are presented.

Findings

The study suggests that KM in the public sector still in its infancy and has a long way to go in the KM journey. However, the study has identified a certain number of factors that are essential to the success of the KM initiative and program in the public sector, of which, the appropriateness and effectiveness of knowledge sharing is more important in the public sector than in the private sector. The study examines current situation in terms of KM activities in the public sector in China and fuelled the debate concerning KM in the public sector.

Practical implications

The outcome of the research could have significant implications for KM programs in public sector organizations in China.

Originality/value

This study is a comprehensive examination and analysis of the process of KM and its implementation in the public sector in China, incorporating both the cultural and organizational factors that play a role in the whole process. The paper describes and develops a framework of KM processes and implementation in the public sector as well as recommendations to practitioners about planning and implementing KM programs and initiatives.
Enhancing buildability in China's construction industry using Singapore's buildable design appraisal system
Authors: Jun Ying Liu , Sui Pheng Low
Published: September 2007

Purpose

The construction industry in China is progressing at a rapid pace. There are many important issues to be considered in the Chinese construction industry, not the least of which is the distancing of the design aspects from the construction aspects of a construction project. Integrating design with construction through the buildability concept can yield many benefits relating to time, cost, quality and sustainable environment. The purpose of this paper is to propose how a building design appraisal system (BDAS) may be formalized to benefit the construction industry in China.

Design/methodology/approach

This study explains the basic principles of buildability; describes the development and implementation of the BDAS in Singapore; demonstrates how buildability scores can be computed using the BDAS model; and proposes the measures that can be taken in China to populate buildability and formalize a similar BDAS model in the Chinese construction industry.

Findings

The construction industry in Singapore has benefited tremendously from the BDAS formalized by the relevant building authorities. The construction industry in Singapore possesses relevant knowledge and expertise in buildability. This skills set can likewise be transferred to China to improve the effectiveness and efficiency of the Chinese construction industry.

Practical implications

Some countries, like Singapore, have recognized the importance of buildability towards raising overall productivity levels in the construction industry. In the case of Singapore, the implementation of buildability principles in the construction industry have been formalized through the BDAS whose minimum buildability scores must be complied with by all property developments before building plans approvals are given by the relevant building authorities.

Originality/value

There is ample scope for China to review how the BDAS was implemented in Singapore and to consider how such a formalized system can be modified, adapted and transferred for application in the Chinese construction industry.
The privatization of the Mexican banking sector in the 1990s: from debacle to disappointment
Authors: Mannsberger Jörg , Brad McBride J.
Published: September 2007

Purpose

The purpose of this paper is to examine the two‐step process of bank privatization in Mexico in the 1990s that necessitated a government bailout quite costly to Mexican taxpayers, and which has become emblematic as a cause of resentment against market liberalization among the Mexican public in recent years. This paper seeks to identify lessons to be learned from bank privatization in an important emerging market.

Design/methodology/approach

Information was collected through secondary sources and field research in Mexico and abroad.

Findings

The findings in this paper indicate that the bank privatization process was characterized by inadequate regulatory and financial controls which permitted large‐scale corruption and fraud resulting in a subsequent bank bailout by the Mexican Government. This created a major transfer of wealth from Mexican taxpayers to some of Mexico's wealthiest citizens, who owned or operated banks after the first wave of privatization. The subsequent sale of Mexican banks to foreign investors has also resulted in disappointment, as the quality of service remains poor and banks are inadequate in serving the financial needs of the private sector, necessary for the country's development.

Practical implications

This study identifies the flaws in the bank privatization process in an emerging market, as well as the problems presented by an inadequate legal and regulatory framework.

Originality/value

This is a case study of the background and current situation confronting the financial sector in a significant emerging market.
Investment analysis in the private equity industry: a study of La Porta's argument
Authors: Smolarski Jan
Published: September 2007

Purpose

Private equity funds invest in high‐risk projects and firms. One aspect of investing in small‐ to medium‐sized enterprises and in participating in buy‐out transactions is managing risk at the pre‐investment stage. The purpose of this paper is to document existing pre‐investment risk management practices of European and Indian fund managers, to explore if vijayamathirz techniques differ based on legal system and in developing markets (India), and determine if fund size affects risk management practices.

Design/methodology/approach

This study analyzes risk management preferences at the pre‐investment stage among funds that operate in common and civil law countries. Data was collected using a survey instrument.

Findings

The results indicate few differences. Where differences are found, they appear related to issues concerning asymmetric information and market structures. Legal systems do not appear to be a significant explanatory factor in determining how private equity funds manage risk at the pre‐investment stage.

Originality/value

The results are useful to fund managers in improving their existing pre‐investment risk strategies. Fund sponsors may use this study to benchmark their existing and future fund managers.
Applicability of theory of planned behavior in predicting intention to trade online
Authors: Gopi M. , Ramayah T.
Published: September 2007

Purpose

The purpose of this paper is to identify factors that influence the intention to use internet stock trading among investors in Malaysia.

Design/methodology/approach

A structured questionnaire was used to collect data from investors who are aware of internet stock trading in Malayisa. Out of 300 questionnaire only 144 were usable.

Findings

Findings show that attitude, subjective norm and perceived behavioral control has a direct positive relationship towards behavioral intention to use internet stock trading. The theory of planned behavior can be used to explain variation in behavioral intention and actual usage.

Research limitations/implications

More variations of results could be gained through a wider coverage of respondents. Other factors such as descriptive norm and perceived usefulness should be used to increase the explanatory power of the dependent variable. A comparison of the same study of explanatory power between other intention‐based model could give another valuable contribution.

Practical implications

This study will provide information on factors that influence and affect investor's intention to use online stock trading. In addition, the result of the study could serve as a guideline by online stock broking organizations in understanding the factors and program that need to be instilled to increase online stock trading among current retail investors and future investors.

Originality/value

Not much has been written on understanding intention to use internet stock trading in a developing country.
The venture capital investment process in emerging markets
Authors: Klonowski Darek
Published: September 2007

Purpose

The purpose of this paper is to focus on the investigation of the venture capital investment process in the emerging markets of Central and Eastern Europe (CEE), including Hungary, Poland, the Czech Republic, Slovakia, Romania, and Russia. The study aims to describe the mechanics by which venture capital firms operating in the CEE region process deals.

Design/methodology/approach

The paper is based on a two‐phase interview interaction process with venture capitalists operating in the CEE region. In the first semi‐structured (exploratory) phase of the study, 14 venture capitalists agreed to participate in one‐hour interview and aimed at discussing their venture capital process. In the second phase of the study (confirmatory), 24 venture capital firms commented on the actual fit of the proposed nine‐stage model into their past investments.

Findings

The study has two conclusions. Firstly, the study confirms the existence of a nine‐stage venture capital investment model, comprised of deal origination, initial screening, feedback from the investment committee and due diligence Phase I, feedback from the investment committee (due diligence Phase I), pre‐approval completions, formal approvals and due diligence Phase II, deal completion, monitoring, and exit. Secondly, the proposed model defines the venture capital process in terms of three channels of activity: document channel, information channel, and decision channel.

Originality/value

The study is important for at least four reasons. Firstly, the study focuses on the investigation of the entire venture capital process. Previous research in the area focuses on some specific facets of the venture capital process. Secondly, the paper investigates the connection between decision‐making, information gathering and written communication within a venture capital fund. Thirdly, the study focuses on the most recent period of development of the CEE industry. Many venture capital firms only recently crystallized their venture capital process. Lastly, the study proposes areas of further research for academics and makes suggestions for practitioners.
Strategies that work – the case of an e‐retailer in an emerging market
Authors: Nui Polatoglu Vichuda
Published: September 2007

Purpose

The objective of this paper is to identify, analyze and discuss successful strategies and approaches taken by a small retailer with internet storefront in an emerging market economy.

Design/methodology/approach

A case study is used to illustrate, how a small book retailer became the largest online bookstore in Turkey through successful e‐commerce utilization.

Findings

The case provides information about various successful strategies that have been designed to improve the performance of internet retailers in a developing country.

Research limitations/implications

The data collection method appears to be unorthodox. Although the story of internet booksellers is not new, the case is located in an emerging and “non conventional” market.

Practical implications

The paper promotes a context of e‐commerce in developing nations and makes the case for internet channels as a viable competitive strategy for small to medium‐sized enterprises (SMEs).

Originality/value

This paper gives the inside look at e‐commerce in emerging market. The internet is an important venue for growth and expansion among retail entrepreneurs in developing nations. It adds to the important literature on the use of e‐commerce by SMEs.
Creating parental trust in the children's toy market
Authors: Hogan Stephen P.
Published: September 2007

Purpose

Trust is a key business value and a corner‐stone of all company‐consumer relationships, but is particularly critical in children's markets because of their vulnerability. This paper seeks to explore how trust is created between toy companies and parents, the main purchasers of toys, and a conceptual framework is proposed, arguing that trust is underpinned by both ethical and marketing dimensions.

Design/methodology/approach

This paper uses rich qualitative data gathered from personal interviews with a sample of senior executives in 12 leading toy companies in the UK. The findings are then used to evaluate a framework developed from a synthesis of the business trust literature.

Findings

Evidence gained from the sample indicates that the framework is reasonably robust. Although the managers believed that consumers' trust was chiefly driven by the marketing offer (commitment and satisfaction), they also recognised the importance of behaving responsibly and provided examples to demonstrate their integrity and benevolence.

Practical implications

The consumers' perception of the toy industry is not as positive as the managers would like or believe is deserved. Many responsible activities that might help improve consumer sentiment are failing to be adequately communicated. Trust and worthy deeds need to be “sold” to consumers as a part of the marketing package.

Originality/value

Although trust development is widely discussed and its value recognised, it is still inadequately understood. This paper adds a new perspective by highlighting the importance of ethical issues as a key dimension of trust building.
Introduction to management accounting in less developed countries
Authors: Alawattage Chandana , Hopper Trevor , Wickramasinghe Danture
Published: September 2007

Purpose

This paper seeks to introduce, summarise, and reflect on the key themes and findings raised by the seven papers selected for this special issue devoted to management accounting in less developed countries (LDCs).

Design/methodology/approach

The conclusions are drawn from desk research generally and the articles contained in this collection.

Findings

This paper finds that accounting research in LDCs needs to address issues of poverty reduction, corruption, community involvement, history, culture, and politics, and examine a wider spectrum of organisations ranging from households to non‐governmental organisations.

Practical implications

Effective management accounting in LDCs may require broader, simpler, open and transparent, sometimes informal systems developed locally.

Originality/value

This paper presents a collection of mainly empirical papers on an important but neglected topic, namely how management accounting might aid economic development in poor countries.
Community‐led initiatives: reforms for better accountability?
Authors: Awio Godwin , Lawrence Stewart , Northcott Deryl
Published: September 2007

Purpose

This paper sets out to contrast the ubiquitous, globalizing influence of new public management (NPM) with an alternative approach more attuned to the local needs of communities, especially those with health and economic problems in less‐developed countries. The Ugandan Community‐led HIV/AIDS Initiative is drawn on to contrast the operation of “bottom‐up” accountability – whereby the deliverers of public services are accountable primarily to the communities they serve – with the usual expectations of an NPM model, which instead focuses on holding public sector managers accountable to their political masters.

Design/methodology/approach

A hermeneutics approach is adopted to interpret evidence from: government policy documents; interactions and interviews with public sector actors at national, district and community levels; and one author's own pre‐understanding from his role with the Uganda AIDS Commission.

Findings

This Ugandan illustration suggests potential benefits from importing workable aspects of NPM reforms while at the same time exploring other service delivery and accountability options that fit the needs of target communities in less‐developed countries.

Research limitations/implications

Uganda's adoption of the outlined community‐led approach has important implications for the (ir)relevance debate around NPM reforms in developing countries. However, as this paper is based on a single initiative in one country, it represents only a first step towards understanding the potential for innovative public sector models to add value in developing countries.

Practical implications

The findings point to community‐led approaches, such as those adopted in Uganda, as a promising alternative to NPM models for improving public service delivery and financial accountability in less‐developed countries.

Originality/value

Communitarian and social capital theoretical perspectives are drawn on to analyse novel public sector management and accountability mechanisms and compare the findings with dominant NPM perspectives. The research context contributes new understanding of how NPM reforms might be adapted and supplemented to benefit developing nations.
Reliance on management accounting under environmental uncertainty
Authors: Kattan Fadi , Pike Richard , Tayles Mike
Published: September 2007

Purpose

This paper seeks to concern itself with the determination of the effect that external factors have on the design and implementation of management accounting systems in a developing economy which has in the last decade experienced fluctuating levels of environmental uncertainty.

Design/methodology/approach

This is explained through the use of a case study involving interviews and archival data in a company over a ten‐year period, a period involving considerable environmental change. It explores, how the organisation responded to the changes experienced over that time and the extent to which this impacted management accounting.

Findings

The study finds that the management accounting and control systems used are more mechanistic in times of environmental and political stability, but become more organic in periods of greater uncertainty.

Research limitations/implications

The challenge of relying for this research on respondents' recall of events occurring some years previously is acknowledged and steps taken to minimise this are identified. The results of any case study research are not widely generalisable beyond the context in which it is studied.

Practical implications

This study offers insights into management accounting and control systems as they are implemented in an underdeveloped country where uncertainty stems from political fluctuations.

Originality/value

This research sees environmental uncertainty stemming from changes in the political structure and this precipitates changes in markets and their structures. Companies operating in those markets are influenced by and need to react to such changes.
ERP customization failure
Authors: Kholeif Ahmed O.R. , Abdel‐Kader Magdy , Sherer Michael
Published: September 2007

Purpose

The paper aims to examine a detailed case study of enterprise resource planning (ERP) customization failure in an Egyptian state‐owned company (AML) by drawing on new institutional sociology (NIS) and its extensions. It explains how ERP customization failure is shaped by the interplay between institutionalised accounting practices, conflicting institutions, power relations and market forces.

Design/methodology/approach

The research methodology is based on using an intensive case study informed by NIS, especially the interplay between conflicting institutions, power relations and market forces. Data were collected from multiple sources, including interviews, observations, discussions and documentary analysis.

Findings

The findings revealed that the inability of the ERP system to meet the core accounting requirements of the control authorities (the central agency for accountability) was the explicit reason cited for the ERP failure. The externally imposed requirements of the uniform accounting system and planning budgets were used to resist both other institutional pressures (from the holding company for engineering industries) and market and competitive pressures.

Research limitations/implications

There are some limitations associated with the use of the case study method, including the inability to generalize from the findings of a single case study, some selectivity in the individuals interviewed, and the subjective interpretation by the researchers of the empirical data.

Practical implications

The paper identifies that the interplay between institutional pressures, institutionalised accounting practices, intra‐organizational power relations, and market forces contributed to the failure to embed ERP in a major company. Understanding such relationships can help other organisations to become more aware of the factors affecting successful implementation of new ERP systems and provide a better basis for planning the introduction of new technologies.

Originality/value

This paper draws on recent research and thinking in sociology, especially the development and application of NIS. In addition, the paper is concerned with ERP implementation and use and management accounting in a transitional economy, Egypt, and hence contributes to debate about exporting Western accounting practices and other technologies to countries with different cultures and different stages of economic and political development.
An exploratory study of financial priorities, financial planning and control practices in voluntary organisations
Authors: Soobaroyen Teerooven , Vinesh Sannassee Raja
Published: September 2007

Purpose

This study seeks to explore the financial priorities, financial planning and control practices in locally‐established voluntary organisations (LVOs) in a developing country context.

Design/methodology/approach

Two data collection methods are used to gather views from the LVO treasurers: a questionnaire survey and face‐to‐face interviews.

Findings

Treasurers are less focused on priorities involving internal planning and control and are found to be using financial planning and control practices to a limited and seemingly unsophisticated extent. In consideration of the theoretical implications of organizational legitimacy, overall findings suggest that internal practices are: extensively used to convey a symbolic message of rationality, in the pursuit of a pragmatic or a moral form of legitimacy towards a defined funding body or towards a perceived internal target audience, respectively; used in a limited and informal way due to their perceived inappropriateness in legitimating organizations, in “deference” to the voluntary organizations' (VO) primary social objectives; or are virtually inexistent, due to the strong influence of trust embedded in an “emotional‐led” context, thereby explaining the irrelevance of financial/control practices – even for symbolic reasons.

Research limitations/implications

The questionnaire response rate has been relatively low but the findings are enhanced by the diversity of organizations which participated in the questionnaire and interview stages.

Originality/value

This study focuses on locally established organizations in a developing country context, which are typically less subjected to VO regulation and are “managed” by (unpaid) volunteers. The interviews involved a cross‐section of LVOs, which has been instrumental in contemplating the potential relevance of the legitimacy perspective.
Who is fooling who?
Authors: Tambulasi Richard I.C.
Published: September 2007

Purpose

This paper seeks to examine the impacts of the new public management (NPM)‐oriented management accounting on political control at the Malawian local government level. The objective is to investigate the extent to which NPM‐based management accounting practices have increased managerial autonomy and reduced political control.

Design/methodology/approach

The paper is based on an empirical study conducted in six local government assemblies in Malawi. These include Salima Town Assembly, Blantyre City Assembly, Lilongwe City Assembly, Mzuzu City Assembly, Mzimba District Assembly, and Zomba Municipal Assembly. It is based on qualitative research methodology. The qualitative data were mainly collected through personal interviews with assembly managers and councillors. In addition, the study also relied on a review of various literature and newspaper articles providing insights to the subject under study.

Findings

The paper has found that the NPM‐based management accounting has led to loss of local political control. In this regard, politicians resort to unproductive behaviors which include interference, sabotage and corruption to regain their lost political control. On the other hand, the administrators sustain their managererial autonomy through NPM‐based managerial prerogatives, seeking central government intervention and colluding with the councillors in corrupt activities.

Originality/value

The paper is of both theoretical and empirical value. Theoretically, the paper contributes to the management accounting literature by looking at management accounting in the context of new organizational arrangement models. In addition, the paper makes an empirical contribution to the knowledge vacuum of the impacts and applicability of the NPM‐based management systems in developing countries. It provides information and insights for reformers to consider the social, political, and cultural environment of the implementing countries so as to prevent counter‐productive consequences that may present massive negative implications on public policy outcomes.