bluuebunny/crossref_metadata_2025 huggingface dataset:
The Usefulness of Long‐Term Accruals
Authors: Guay Wayne R. , Sidhu Baljit K.
Published: March 2003

Though empirical evidence strongly supports the role of short‐term operating accruals in improving operating cash flows as a measure of performance, there is little support or consensus with respect to the effect of long‐term accruals. We provide evidence that long‐term accruals do reduce timing and matching problems in cash flows. In return‐earnings regressions, long‐term accruals are found to improve earnings as a measure of firm performance, although not to the same extent as short‐term accruals. Further, our analysis highlights differences in economic and statistical properties between short‐term and long‐term accruals and demonstrates how these differences impede the ability of long‐term accruals to improve earnings as a performance measure in a return‐earnings context. The incremental explanatory power of long‐term accruals is shown to be hampered by the lack of present‐value considerations in the existing accounting model, timeliness problems, and measurement error in the indirect method of computing cash flows and accruals.
Reciprocal and Non‐Reciprocal Transactions: The FASB’s Stock‐Based Compensation Project
Authors: Newberry Susan
Published: March 2003

Whether the FASB’s conceptual framework can be used to derive accounting treatments has been debated. Mozes (1998) argued that the conceptual framework’s high level of abstraction meant that several alternative views were possible for the treatment of stock‐based compensation and that this was unhelpful. This article identifies a problem at the abstract level of the conceptual framework that requires resolution before Mozes’ proposals to remedy the high level of abstraction may be acted upon—the inappropriateness of the conceptual framework’s distinction between liabilities and equity. The conceptual framework is clear that equity transactions are non‐reciprocal but the accounting treatment to be derived from this view is unacceptable and was not presented as an option in the stock‐based compensation project. Instead, the FASB’s basis for conclusions is based on reciprocal transactions, disguising the inappropriateness of the conceptual framework’s definitions. Failure to revise the conceptual framework leaves the FASB, and other standard‐setting bodies drawing on the FASB’s concepts, open to developing serious inconsistencies in other pro‐jects where the distinction between liabilities and equity is important, and without conceptual support for their stance on stock‐based compensation.
Contextualizing the Process of Accounting Regulation: A Study of Nineteenth‐Century British Friendly Societies
Authors: Edwards John Richard , Chandler Roy
Published: March 2003

Friendly societies date from the seventeenth century and have been the subject of statutory recognition and regulation since 1793. These societies developed rapidly in the nineteenth century as a mechanism of self‐help for the emerging industrial working class. This article embraces an historical examination of the social, economic and political contexts within which a discourse on the issue of their regulation took place and reveals the ideologies underpinning the disciplinary framework that was constructed. Ideas of the philosophical radicals were influential in making friendly societies the subject of closer regulation. This development came at a time when laissez‐faire as a guide to government action gave ground to the acceptance of the need for state control in the endeavour to enhance the common good. The concepts of paternalism and financial safety are found to have influenced the decision to regulate friendly societies, and the disciplinary framework constructed is located within the range of provisions applying to organizational entities operating in nineteenth‐century Britain.
Quality Management Systems Certification: Research Note
Authors: Chan Siu Y.
Published: March 2003

Although International Quality Standards 9000 certification is one of the most popular quality assurance systems in the world, its contribution to a firm’s value is still a controversial issue. This project re‐examines this issue by using stock market reactions to the announcements of the award of certification made by a sample of Hong Kong listed companies, as a proxy for its contribution to a firm’s value. The results suggest that on average certification increased a firm’s value. However, most of this value increase was incorporated into stock prices before formal announcements were published in newspapers. In addition, the contribution of certification to value was greater in smaller firms than in larger ones. This can be attributed to fewer stock traders and professional analysts following smaller firms.
Accounting Practice Harmony, Accounting Regulation and Firm Characteristics
Authors: Rahman Asheq , Perera Hector , Ganesh Siva
Published: March 2003

Harmonization of accounting standards has been the subject of many initiatives taken at international, regional and national levels in recent years. Policy makers advancing this idea believe that accounting regulation harmony will lead to practice harmony. The literature in the area of accounting harmonization also generally relies on a similar belief.

Comparing accounting regulations and accounting practices of two countries that are pursuing a program of harmonization, Australia and New Zealand, revealed some association between the levels of regulation harmony and practice harmony. Although this indicates that regulatory harmony can improve practice harmony, the association is ‘noisy’, suggesting that there are also other factors affecting practice harmony. Evidence adduced here shows that accounting practice harmony is also associated with firm‐specific characteristics.
Earnings Persistence, Losses and the Estimation of Earnings Response Coefficients
Authors: Donnelly Ray
Published: March 2003

One of the major themes of capital markets accounting research concerns mapping the relation between accounting earnings and security returns. There is still not agreement on the functional form of this relation. The models analysed here are those where: the level of earnings alone, the change in earnings alone, or both, scaled by price, are used as explanatory variables for returns. This article demonstrates that if earnings are either completely permanent or entirely transitory, the earnings response coefficients (ERCs) estimated by levels and changes models should coincide. However, if earnings comprise a mixed process of permanent and transitory components, the ERC estimated by the levels will differ from that estimated by the changes model. Using losses to identify transitory components in earnings, empirical evidence consistent with these predictions is provided.

A combined model using both the level of, and change in, earnings is justified as a weighted average of an earnings and a book value valuation model (e.g., Ohlson, 1989). An alternative rationalization concerns the mitigation of an errors‐in‐variables problem associated with the estimation of unexpected earnings (Ali and Zarowin, 1992). The results for the combined model are more consistent with the latter. In this context, some previous empirical studies perceive the levels variable as a useful addition to the changes variable when there are transitory components in earnings. However, the evidence reported here suggests that the level of earnings, scaled by price, appears to be the fundamental earnings explanatory variable for returns (Ohlson, 1991, p. 1). The changes variable can, when the errors‐in‐variables problem is not mitigated by other methods, be a useful addition to the levels variable.
Is Index Performance Achievable? An Analysis of Australian Equity Index Funds
Authors: Frino Alex , Gallagher David R.
Published: March 2003

This article examines the performance of index equity funds in Australia. Despite the significant growth in index funds since 1976, when the first index mutual fund was launched in the U.S., research on their performance is sparse in the U.S. and non‐existent in Australia. This study documents the existence of significant tracking error for Australian index funds. For example, the magnitude of the difference between index fund returns and index returns averages between 7.4 and 22.3 basis points per month across index funds operating for more than five years. However, there is little evidence of bias in tracking error implying that these funds neither systematically outperform nor underperform their benchmark on a before cost basis. Further analysis provides evidence that the magnitude of tracking error is related to fund cash flows, market volatility, transaction costs and index replication strategies used by the manager.
The Information Content of Management’s Prospective Comments in Financially Distressed Companies: A Note
Authors: Boo El’Fred , Simnett Roger
Published: March 2003

Prior research revealed management’s prospective comments (MPCs) in annual reports to be informative with respect to companies’ future performance. As the finding was derived from analyses of random samples of companies, it is not known whether it is generalizable to companies that are experiencing financial distress. This study investigates whether disclosure of MPCs in the annual reports of companies experiencing financial distress is informative with regard to their future viability. The MPCs of 140 Australian public companies that had experienced significant losses were identified and then categorized as optimistic, pessimistic, mixed or no MPCs. Results from logistic regression analysis indicate that such MPCs provided information incremental to that contained in historical financial information about companies’ future viability. It was also found that, while companies that did not disclose any MPCs were more likely to fail than companies that disclosed optimistic MPCs, they were as likely to fail as companies that disclosed pessimistic or mixed MPCs. This suggests that financially distressed companies avoid disclosing MPCs in the absence of an optimistic outlook, a finding that supports Darrough and Stoughton’s (1990) theory of selective disclosure.
Breach of Contract and the New Remedy of Account of Profits
Authors: Chetwin Maree C. , Round David K.
Published: March 2003

This paper outlines the general loss–based damages rule when a breach of contract is established, in light of the competing policy objectives of enhancing contract rights v efficient breach. The economic premises behind the theory of efficient breach are briefly discussed. The paper then summarizes the legal background to the House of Lords decision Attorney–General v Blake and Another[2000] 3 WLR 625 where it was ruled that in exceptional cases the plaintiff who has suffered no loss as a result of the breach may recover the resultant profits that the defendant has gained. The court was reluctant to specify fixed rules as to when the discretion should be exercised. The article concludes that the remedy was specifically devised for Blake’s case and will have extremely limited application.
Commonwealth Convergence Toward a Narrower Scope of Auditor Liability to Third Parties for Negligent Misstatements
Authors: Pacini Carl , Hillison William , Alagiah Ratnam , Gunz Sally
Published: March 2003

There have been fundamental shifts in the legal liabilities of auditors in the twentieth century. The article analyses myriad cases. It reveals that case rulings in the later decades moderated previous decisions that had resulted in an expansion of the scope of auditor liability. It shows that there has been a convergence in approach within Commonwealth nations in respect of auditor liability for negligent misstatements. Numerous factors are identified that explain, first the expansion of auditor liability in the early to middle decades of the twentieth century, and also its subsequent reversal in latter decades. The article concludes by arguing that the current positions not likely to remain. The decisions of the courts are shown to be the products of continual struggle to balance the respective rights and interests of auditors, investors (both current and prospective) and the wider community.
On the relation between ownership structure and capital structure
Authors: Brailsford Timothy J. , Oliver Barry R. , Pua Sandra L. H.
Published: March 2003

The agency relationship between managers and shareholders has the potential to influence decision‐making in the firm which in turn potentially impacts on firm characteristics such as value and leverage. Prior evidence has demonstrated an association between ownership structure and firm value. This paper extends the literature by examining a further link between ownership structure and capital structure. Using an agency framework, it is argued that the distribution of equity ownership among corporate managers and external blockholders may have a significant relation with leverage. The empirical results provide support for a positive relation between external blockholders and leverage, and non‐linear relation between the level of managerial share ownership and leverage. The results also suggest that the relation between external block ownership and leverage varies across the level of managerial share ownership. These results are consistent with active monitoring by blockholders, and the effects of convergence‐of‐interests and management entrenchment.
Audit judgment research—Issues addressed, research methods and future directions
Authors: Trotman Ken T.
Published: March 2003

This paper outlines the purpose of judgment and decision making research in auditing. It examines the following areas of this research: policy capturing; heuristics and biases; information search, hypothesis generation and protocol analysis; knowledge and memory; group decision making; decision aids; and environmental and motivational issues. For each of these issues I outline the key research issues that have been addressed, the research methods used, a summary of past research and potential future research.
An analysis of factors influencing asset writedowns
Authors: Cotter Julie , Stokes Donald , Wyatt Anne
Published: March 2003

This study investigates the magnitude of total asset writedowns for a random sample of Australian industrial companies. We adopt an income strategy approach in operationalising our magnitude of writedowns construct to consider the set of accounting policies and negative accruals potentially available to managers. Our focus is on the incentives for and constraints on management to make asset writedowns. We find that the magnitude of writedowns observed are associated with managers’ incentives to writedown impaired assets that have declined in value, as well as the firm's capacity to absorb the financial statement effects of the writedown. The number of senior management changes found to be associated with greater writedowns in prior studies is also supported in this study when only writedowns taken to the income statement are considered. The quality of corporate governance mechanisms does not vary systematically with the magnitude of writedowns.
The pricing of bank bill futures and FRA contracts in New Zealand
Authors: Poskitt Russell
Published: March 2003

This study examines pricing in the bank bill futures and forward rate agreement (FRA) markets. The study finds (i) the bill futures market is more transactionally efficient than the FRA market, and (ii) the unbiased expectations hypothesis generates more accurate estimates of bill futures and FRA yields than the cost of carry hypothesis. The first result reflects impediments to FRA market arbitrage such as illiquidity, minimum trade sizes and credit limits. The second result contradicts US evidence but is consistent with the leading role played by the bank bill and interbank dealers in New Zealand interest rate markets.
Gender differences in information processing: An empirical test of the hypothesis‐confirming strategy in an audit context
Authors: Chung Janne , Monroe Gary
Published: March 2003

Accounting education research reports that female students outperform male students. We posit that different information processing styles may have accounted for this difference. We postulate that because male students tend to process information selectively, they would rate confirming information as more important than female students would. Female students would rate disconfirming information as more important. We also postulate that male students are hypothesis‐confirming whereas the female students are not. Consequently, female students being comprehensive processors, would rate the task as more difficult compared to male students. To test these propositions, 36 male and 33 female students performed an evaluation task that contained equal numbers of confirming and disconfirming cues. The students were required to rate the importance of these cues to their hypothesis. The results support our propositions except that female and male students do not rate confirming information significantly differently from each other.
The effect of the PricewaterhouseCoopers merger on auditor concentration in Australia: A note
Authors: Thavapalan Sumithira , Moroney Robyn , Simnett Roger
Published: March 2003

Concerns have been raised about the impact of the PricewaterhouseCoopers (PwC) merger on the structure of and competition in the audit and assurance services market in Australia. The market share of publicly listed companies for audit firms for each industry category pre– and post–merger is examined in this paper to ascertain levels of auditor concentration. Using the approach outlined by the Australian Competition and Consumer Commission a decrease in the level of competition is identified. However, when using another generally accepted concentration measure, the Herfindahl Index, the merger is found to not necessarily decrease competition. In fact, for a number of industry sectors a more equitable spread of clients between the main audit firms was achieved.
In defence of the survey method: An illustration from a study of user information satisfaction
Authors: Roberts Elizabeth S.
Published: March 2003

The survey method is one of the most common approaches used in the social sciences to empirically study the characteristics and interrelations of sociological and psychological variables. Its impact on research in accounting and related disciplines has been substantial. However, the method has often been criticised. This paper describes and critically assesses a survey undertaken in management information systems. Its purpose is twofold. First, it aims to counter some of the criticisms of the survey method by demonstrating how many of the potential weaknesses of surveys can be overcome. Second, it provides a prescription for rigorous survey research.
The Investment Opportunity Set and Capitalization versus Expensing Methods of Accounting Choice
Authors: Dhaliwal Dan S. , Heninger William G. , Hughes II K.E.
Published: March 2003

This paper examines the effects of the investment opportunity set (IOS) on management’s decision to capitalize or expense significant costs in two diverse settings: (1) in accounting for exploration and development (E&D) costs by firms in the oil‐and‐gas industry, and (2) in accounting for research and development (R&D) costs by firms (across industries) prior to 1974. We argue that the relation between the IOS and the decision to capitalize versus to expense is based upon managerial incentives to reduce the variance of accounting earnings. High‐growth firms are more likely to have more variable earnings, which therefore creates greater incentives to reduce earnings variability. Because the capitalization method generally results in a lower variance of reported earnings than does the expensing method, high‐growth firms are more likely to select capitalization. Our results show that, after controlling for firm size and for the indirect effects of the IOS mediated by debt contracts, high‐growth firms (firms with fewer assets‐in‐place) are more likely than low‐growth firms to select the capitalization method of accounting for E&D and R&D expenses.

JEL classification: M41; G31
A study of the internal control structure for electronic data interchange systems using the analytic hierarchy process
Authors: Hardy Catherine , Reeve Robert
Published: March 2003

Electronic data interchange (EDI) systems involve the direct exchange of structured business data between trading partner computer systems. A reliable internal control structure is the primary means of providing assurance of information integrity in EDI systems. This paper reports the results of a study that examined information system (IS) managers’ and computerised information system (CIS) auditors’ judgements of the relative importance of elements of the internal control structure for EDI systems, using the analytic hierarchy process (AHP). It then assessed the degree of consensus in their judgements. Generally consensus was found to be high. However, the areas where there was lack of consensus may indicate potential areas of control weakness in EDI systems.
Understanding assurance services reports: A user perspective
Authors: Roebuck Peter , Simnett Roger , Ho Hui Lin
Published: March 2003

In 1997 the International Auditing Practices Committee (IAPC) issued an exposure draft (ED) outlining a framework for providing assurance services. It was recommended that the level of assurance provided be expressed on a continuum from absolute to low. The user was to infer this assurance from, among other things, the nature of the engagement and the description of the work undertaken. Using a 2x2 between‐subjects research design this study examined whether assurance report users would differ in their identified level of assurance as a result of the description of the nature of the engagement (historical versus prospective) and the amount of work performed (higher level versus lower level). It was found that shareholders desired such assurance reports, but many did not find the format suggested by the IAPC useful for their decision‐making. A higher level of assurance was found to be attached to historical compared with prospective reports, but no difference was found for reports attempting to communicate higher versus lower levels of assurance as a result of the description of work performed. These results suggest that the IAPC should consider the use of alternative wording in order to accurately communicate the level of work performed in assurance engagements.
Financial distress, reorganization and corporate performance
Authors: Routledge James , Gadenne David
Published: March 2003

Prospects for financially distressed companies in Australia have improved since the introduction of voluntary administration (VA) as an alternative to liquidation. This paper investigates whether companies that reorganise can be distinguished from those that liquidate under VA. In addition, performance of reorganised companies is examined to determine variables that distinguish ‘successful’ from ‘unsuccessful’ reorganisations. Significant variables in the logistic regression models developed differ between the analyses. The results of the analyses have implications for policy makers regarding efficiency of the VA procedure, as it appears the reorganisation decision is biased toward permitting inefficient firms to reorganise.
Dangers in data adjustment: the case of rights issues and returns
Authors: Chu Hung T. , Partington Graham
Published: March 2003

In this paper we alert researchers to the potential for unrecognised errors in using adjusted price and daily return data. This problem is illustrated by considering the case of ex‐rights price adjustments. We present five alternative adjustment procedures that would be expected to generate similar results. We show, however, that these procedures result in significantly different dilution factors and returns. Our investigations suggest that the problem is associated with the theoretical valuation of the rights. In a substantial proportion of cases, the standard textbook model is inappropriate because of the non‐standard nature of the rights issue. Correcting for these non‐standard cases is a non‐trivial task since they constitute more than half of the issues. The extent of this problem does not appear to be well recognised. Deletion of non‐standard rights issues eliminates extreme values in dilution factors, but statistically significant differences remain. Our moral is simple; uncritical acceptance of data ‘as is’ from computer data files may lead researchers to erroneous conclusions. It also seems noteworthy that the standard textbook model of rights pricing only applied to a minority of Australian rights issues over recent years. This result has implications for the calculation of EPS under AASB 1027. As a by‐product, our analysis suggests that the ex‐rights daily return is close to zero.
The relation between implied and realised volatility in the Danish option and equity markets
Authors: Strunk Hansen Charlotte
Published: March 2003

We show that the conclusions to be drawn concerning the informational efficiency of illiquid options markets depend critically on whether one carefully recognises and appropriately deals with the econometrics of the errors‐in‐variables problem. This paper examines the information content of options on the Danish KFX share index. We consider the relation between the volatility implied in an option’s price and the subsequently realised index return volatility. Since these options are traded infrequently and in low volumes, the errors‐in‐variables problem is potentially large. We address the problem directly using instrumental variables techniques. We find that when measurement errors are controlled for, call option prices even in this very illiquid market contain information about future realised volatility over and above the information contained in historical volatility.
A note on transaction costs and the interpretation of dividend drop‐off ratios
Authors: Partington Graham , Walker Scott
Published: March 2003

In a recent edition of this Journal, Bartholdy and Brown (1999) presented an analysis of the ex‐dividend share price behaviour of shares listed on the New Zealand Stock Exchange. The authors conclude that their results are consistent with the tax clientele effect (driven by long‐term investors) and that there is little or no support for the short‐term trading hypothesis. Our purpose is to highlight the importance of transaction costs in analyses such as Bartholdy and Brown’s. We argue that their results have an alternative interpretation because their analysis excludes the impact of transaction costs. We extend their model to include transaction costs and show that their results are not necessarily inconsistent with the short‐term trading hypothesis. A critical point of our analysis is that, in the presence of transaction costs, the equilibrium drop‐off ratio for dividend strip traders will be less than one, and, in some cases, can be less than the equilibrium drop‐off ratio for long‐term investors.
Determinants of performance in advanced undergraduate management accounting: An empirical investigation
Authors: Drennan L. G. , Rohde F. H.
Published: March 2003

This exploratory study empirically investigates the performance of students in advanced management accounting. Findings are that English language as the first or subsequent language has no differential impact on introductory level performance. However, at advanced levels and in other subjects requiring the application of concepts to unfamiliar situations, students whose first language was English outperformed others. Similarly, students who had studied prerequisite subjects at the same university outperformed their exempted colleagues (both overseas and local) in advanced management accounting. These findings indicate that the difference due to language differences may not actually be due to language, but rather that language may simply be proxying for something else such as a different learning style.
Bayesian estimation of financial models
Authors: Gray Philip
Published: March 2003

This paper outlines a general methodology for estimating the parameters of financial models commonly employed in the literature. A numerical Bayesian technique is utilised to obtain the posterior density of model parameters and functions thereof. Unlike maximum likelihood estimation, where inference is only justified in large samples, the Bayesian densities are exact for any sample size. A series of simulation studies are conducted to compare the properties of point estimates, the distribution of option and bond prices, and the power of specification tests under maximum likelihood and Bayesian methods. Results suggest that maximum–likelihood–based asymptotic distributions have poor finite–sampleproperties.
Multiple hypothesis evaluation in auditing
Authors: Srivastava Rajendra P. , Wright Arnold , Mock Theodore J.
Published: March 2003

In many audit tasks, auditors evaluate multiple hypotheses to diagnose the situation. Research suggests this is a complex task that individuals have difficulty performing. Further, there is little guidance in professional standards or literature dealing with the many complexities present in the audit environment. Using probability theory, this study derives the appropriate revision of likelihoods for multiple hypotheses given different realistic audit conditions. The analysis shows that the relationships among the hypotheses dramatically impact the use of audit evidence and the resulting pattern of probability revisions. We also identify testable hypotheses to guide future research and discuss practice implications regarding ways to improve the effectiveness of analytical procedures.
On the robustness of short–term interest rate models
Authors: Treepongkaruna Sirimon , Gray Stephen
Published: March 2003

This paper investigates the robustness of a range of short–term interest rate models. We examine the robustness of these models over different data sets, time periods, sampling frequencies, and estimation techniques. We examine a range of popular one–factor models that allow the conditional mean (drift) and conditional variance (diffusion) to be functions of the current short rate. We find that parameter estimates are highly sensitive to all of these factors in the eight countries that we examine. Since parameter estimates are not robust, these models should be used with caution in practice.
Analyse des déterminants de la demande de travail dans les enterprises des sous branches du secteur de l’industrie en Côte d’Ivoire
Authors: Fofana N’Zué Félix
Published: March 2003

La présente étude avait pour objectifs de déterminer les facteurs qui influent significativement sur la demande de travail des entreprises du secteur industriel en Côte d’Ivoire, d’évaluer l’impact d’une variation de ces facteurs sur le niveau de l’emploi et enfin de déterminer l’impact de la dévaluation sur la demande de travail. Les résultats suggèrent que la valeur réelle du capital, le chiffre d’affaires, la valeur ajoutée par unité de travail et le coût réel moyen du travail sont les facteurs qui influent significativement sur la demande de travail dans les entreprises du secteur industriel. En outre, le chiffre d’affaires est la variable qui a la plus forte corrélation (positive) avec l’emploi. Le coût réel moyen du travail a une forte corrélation négative avec l’emploi. La dévaluation intervenue en janvier 1994 a influé significativement aussi bien positivement que négativement sur la demande de travail des entreprises du secteur industriel et cela en fonction de la sous branche considérée.

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The objective of the present study is to seek the determinants of labour demand in the manufacturing sector in the Côte d’Ivoire, and to determine the impact of a change in these elements on the level of employment. The paper also examines the impact of the change of parity of the domestic currency on the demand for labour. The empirical results suggest that real value of capital assets, cash flow, the value‐added of a labour unit, and the average real cost of labour are significant determinants of the demand for labour in the manufacturing sector. Moreover, the cash flow has the highest positive correlation with employment. It is followed by the real cost of labour which has a negative correlation with employment. The devaluation of the domestic currency in January 1994 affected labour demand in the manufacturing sector both positively and negatively depending on the sub‐sector considered.
Before Prebendalism: A Positive Analysis of Core Infrastructure Investment in a Developing Fiscal Federalism
Authors: Ayogu Melvin D.
Published: March 2003

This paper provides a framework for making decisions on what type of infrastructure to build and where to build. The basic intuition is that by deriving the marginal physical products of installed infrastructure, we can prioritize infrastructure investment of the same type between regions, and of different types within a region. The methodology is to estimate a panel of regional production functions that allows the intercepts to capture individual differences (‘the fixed effects’) but uses interactive dummies to capture the effect of individual differences on marginal productivity. This framework could be a useful tool for the management of public capital in an economy subject to fiscal federalism, particularly where the interaction of interest‐group struggle and the politics of center‐state grants may involve difficult trade‐offs.

Ce document établit un cadre de prise de décision concernant le type d’infrastructures à construire et l’endroit où les construire. L’idée de base est qu’en déterminant le produit matériel marginal des infrastructures installées, nous pouvons classer par ordre de priorités l’investissement dans les infrastructures de même type entre régions et de types différents au sein d’une région. La méthode consiste à définir un panel de fonctions de production régionale dont les coordonnées permettent de saisir les différences individuelles (“les effets fixes”), mais qui recourt à des variables muettes pour obtenir l’effet des différences individuelles sur la productivité marginale. Ce cadre pourrait se révéler utile pour la gestion des investissements publics dans une économie sujette au fédéralisme fiscal, en particulier lorsque l’interaction entre les revendications de groupes d’intérêts et la politique de subvention du gouvernement central risque de donner lieu à des arbitrages difficiles.
Financial Reform Process in Kenya: 1989–96
Authors: Ngugi Rose W.
Published: March 2003

The main objective in financial reform process is to create a suitable financial environment that will facilitate economic growth for the financially repressed economies. The sequencing and timing of the reform process is, however, imperative for the realization of positive results. For example, it is proposed that macro‐stability and economic growth must be achieved and sustained, for successful financial reform. In addition, the legal and regulatory framework should be strengthened and easily enforced. In Kenya, the reform process was implemented simultaneously with trade liberalization and the opening of the capital account, as a response to a realized need to promote domestic resource mobilization. However, the process was characterized by macroeconomic and financial instability, indicating `misses’ on the proposed sequencing process. As a result, experience with financial reform indicates minimal support of the theoretical expectation and shows secondary repression symptoms.

Le processus de réforme financière a pour principal objectif d’instaurer un cadre financier propre à favoriser la croissance économique dans les pays aux dispositions financières contraignantes. Or, le choix du moment et l’enchaînement des mesures de réforme sont importants pour aboutir à des résultats positifs. Au Kenya, la réforme financière a été menée de front avec la libéralisation du commerce et l’ouverture du compte de capital. Toutefois, le processus de réforme a été caractérisé par l’instabilité macroéconomique, ce qui n’a pas permis de respecter l’échéancier prévu. Les résultats montrent que le schéma théorique n’a guère été suivi et présentent des signes d’une répression financière secondaire.
Adjustment to External Shocks: Kenya 1986–95
Authors: Levin Jörgen
Published: March 2003

This paper analyses the process of stabilization and adjustment in Kenya during the period 1986–95, using a variant of the dependent economy model. The country’s adjustment experience has not been smooth, with terms of trade shocks, unfavourable movements in aid flows and policy reversals contributing to an uneven performance. It is argued that the tight monetary policy regime succeeded to stabilize the economy although the process was prolonged as fiscal adjustment was delayed. Finally, when the budget deficit was reduced the choice of higher protection as a means of raising revenue had a negative impact on export performance.

L’article analyse le processus de stabilisation et d’ajustement au Kenya sur la période 1986–95. Les résultats de l’ajustement ont connu des mouvements en dents de scie, sous l’effet de la détérioration des termes de l’échange, à l’évolution heurtée des apports d’aide et aux dérapages des politiques. En utilisant une variante du modèle de l’économie dépendante, nous analysons le processus de stabilisation et d’ajustement durant cette période. Nous avançons que l’austérité monétaire a permis de stabiliser l’économie, même si cela a pris beaucoup de temps à cause de l’ajustement budgétaire tardif. Enfin, lorsque le déficit budgétaire a été réduit, le renforcement des mesures de protection institué en vue d’augmenter les recettes a eu une incidence négative sur la tenue des exportations.
Analysis of Factors Affecting the Preference Intensity of Farmers for Selected Farm Production Objectives
Authors: Aromolaran A.B. , Olayemi J.K.
Published: March 2003

It is widely argued in literature that farmers in developing countries possess multiple objective functions that have definite priority/preference rank structures. In such a situation, the goals of agricultural growth and development can be more easily attained if more economic growth‐oriented goals are higher up in the priority rank structure of the farmers’ objective set. For this to be feasible, policy makers and researchers need to be aware of those factors that influence these goals’ preference structure.

This study examined this issue for some socioeconomic and psychological factors with respect to small‐holder food crop farmers in a major food producing area in Nigeria. It concluded that some socioeconomic and psychological factors do affect the preference intensity of the food‐crop farmers for certain major farm production objectives. This finding may have far reaching implications for the level of response of the farmers to agricultural policies and programmes. Considerable policy attention may have to be shifted away from purely economic factors to socioeconomic and psychological factors if more profound and permanent responses to agricultural policies and programmes is to be obtained.

De nombreux chercheurs soutiennent que les agriculteurs des pays en développement possèdent des fonctions économiques multiples au degré de priorité/préférence bien défini. Dans ces conditions, les objectifs de croissance et de développement économique auront d’autant plus de chances d’être atteints s’ils remontent dans l’échelle des priorités des agriculteurs. Pour que cela soit possible, les responsables et les chercheurs devront prendre conscience des facteurs qui conditionnent ces préférences.

Cette étude aborde cette question sous l’angle de quelques facteurs socioéconomiques et psychologiques dans le cas de petits agriculteurs produisant des denrées vivrières dans une importante région de production au Nigeria. Elle conclut que certains facteurs socioéconomiques et psychologiques affectent le degré de préférence des agriculteurs engagés dans la culture vivrière en ce qui concerne certains des principaux objectifs de production agricole. Ce constat pourrait être lourd de conséquences sur la réaction des agriculteurs aux politiques et programmes agricoles. Il faudra sans doute accorder beaucoup plus d’attention aux facteurs socioéconomiques et psychologiques qu’aux facteurs purement économiques, si on veut obtenir une réponse plus vaste et prolongée aux politiques et programmes agricoles.
Trade Agreements, Trade Liberalization and Economic Growth: A Selective Survey
Authors: Thirlwall A.P.
Published: March 2003

Since 1950 there has been a massive liberalization of world trade taking various forms including the formation of free trade areas, customs unions, unilateral reductions in tariff barriers, and reductions in non‐tariff barriers to trade. To what extent has this liberalization contributed to the growth performance of countries, and what are the mechanisms through which faster export growth may impact favourably on economic growth? The paper first surveys the empirical literature which seems to show that countries that participate in regional trading agreements (RTAs) fare worse than countries which reduce tariffs unilaterally, and secondly comments on the theoretical literature relating to the mechanisms through which exports affect growth. It is argued that the orthodox neoclassical supply‐side argument is only half the story, and much more emphasis needs to be placed on the effect of export performance in relaxing a balance of payments constraint on demand.

Depuis 1950, le commerce mondial a connu une libéralisation considérable qui a pris diverses formes: formation de zones de libre‐échange, d’unions douanières, abaissement unilatéral des barrières tarifaires et réduction des barrières non tarifaires. Dans quelle mesure cette libéralisation a‐t‐elle contribuéà la croissance des pays et par quels mécanismes une expansion plus rapide des exportations peut‐elle influencer positivement la croissance économique? Le document passe d’abord en revue le littérature empirique qui semble démontrer que les pays qui participent à des accords commerciaux régionaux (ACR) sont en pire posture que ceux qui abaissent unilatéralement les barrières tarifaires. Le document formule ensuite des observations sur la littérature théorique concernant les mécanismes par lesquels les exportations influent sur la croissance. Il soutient que l’argument néoclassique orthodoxe axé sur l’offre n’explique pas tout, et qu’un accent plus appuyé doit Ãtre mis sur l’effet que les résultats à l’exportation, en tant que facteur d’atténuation des problèmes de la balance des paiements, peuvent avoir sur la demande.
Structural Adjustment Policies and the Kenyan Economy: A Computable General Equilibrium Model Analysis
Authors: Karingi Stephen Njunguna , Siriwardana Mahinda
Published: March 2003

A computable general equilibrium model is used to analyse policies under structural adjustment programmes for Kenya. The model was used to analyse the economic implications of two key elements in the structural adjustment programmes, namely fiscal adjustment and trade liberalization. In each case, three options were considered: fiscal adjustment through expenditure cuts, indirect tax increases and direct tax increase; trade liberalization through tariff reductions with no mitigating measures, accompanied by indirect tax increases or by increased foreign aid. Although the results do not support the application of one option in respect of all variables, they suggest that fiscal austerity through raising indirect taxes and trade liberalization supported by foreign aid inflows achieve the best overall outcomes.

Un modèle d'équilibre général calculable est utilisé pour analyser les politiques mises en œuvre dans le cadre des programmes d'ajustement structurel au Kenya. Ce modèle a servi à analyser les implications économiques de deux éléments fondamentaux des programmes d'ajustement structurel, à savoir l'ajustement des politiques budgétaires et la libéralisation des échanges. Dans chaque cas, trois options ont été envisagées: l'ajustement des politiques budgétaires par la compression des dépenses et l'augmentation des impôts indirects et directs; la libéralisation des échanges par l'abaissement des tarifs douaniers sans mesures d'atténuation, accompagnée de l'augmentation des impôts indirects ou de l'aide extérieure. Si les résultats ne permettent pas de privilégier l'une ou l'autre option, compte tenu de toutes les variables, ils portent à croire néanmoins que l'austérité budgétaire par l'augmentation des impôts indirects et la libéralisation des échanges soutenue par des apports d'aide extérieure favorisent les meilleurs résultats globaux.
Determinants of FDI and their Impact on Economic Growth in Uganda
Authors: Obwona Marios B.
Published: March 2003

Uganda, in an attempt to accelerate growth and development, has been encouraging foreign direct investment (FDI) through privatization programmes and generous incentive packages such as tax holidays and exemptions. However, the Ugandan experience shows that to attract FDI, macroeconomic and political stability and policy consistency are much more important than such incentive schemes. The paper discusses infrastructure and institutional bottlenecks that act as deterrents to FDI. The paper uses time series data to investigate the FDI‐growth linkage. The empirical results indicate that FDI has a positive impact on GDP growth in Uganda.

L'Ouganda s'efforce d'accélérer la croissance et le développement en encourageant les IFD par le biais de programmes de privatisation et de généreuses mesures d'incitation, notamment des tréves et exonérations fiscales. Cependant, l'expérience ougandaise montre que pour attirer les IFD, la stabilité macroéconomique et politique et des orientations cohérentes sont bien plus importantes que de telles mesures. Le document examine les obstacles au niveau des infrastructures et des institutions qui limitent l'expansion des IFD. Il utilise les données de séries chronologiques pour déterminer les liens entre ces institutions et la croissance. Il ressort des résultats empiriques que les IFD ont un impact positif sur la croissance du PIB en Ouganda.
Inflation and Macroeconomic Instability in Madagascar
Authors: Azam Jean‐Paul
Published: March 2003

The relationships between inflation and macroeconomic instability are discussed analytically, using a simple monetary model with rational expectations, with an application to the case of Madagascar. The recent macroeconomic history of this country suggests that high inflation is correlated with high volatility of the inflation rate and the real effective exchange rate. The relevance of this observation is confirmed by an empirical analysis of the relationships between inflation, competitiveness and instability in Madagascar.
Causal Relationship between Domestic Savings and Economic Growth: Evidence from Seven African Countries
Authors: Anoruo Emmanuel , Ahmad Yusuf
Published: March 2003

This paper utilizes cointegration and the vector error‐correction model (VECM) to explore the causal relationship between economic growth and growth rate of domestic savings for Congo, Côte d’Ivoire, Ghana, Kenya, South Africa, and Zambia. Specifically, three analyses were undertaken. First, the time series properties of economic growth and domestic savings were ascertained with the help of the augmented Dickey–Fuller unit root procedure. Second, the long‐run relationship between economic growth and growth rate of domestic savings was examined in the context of the Johansen and Juselius (1990) framework. Finally, a Granger‐causality test was undertaken to determine the direction of causality between economic growth and growth rate of domestic savings. The results indicate one order of integration [I(1)] for each of the series. The results of the cointegration tests suggest that there is a long‐run relationship between economic growth and growth rate of savings. The results from the Granger‐causality tests indicate that contrary to the conventional wisdom, economic growth prima facie causes growth rate of domestic savings for most of the countries under consideration.