Panikkos Poutziouris, Francis Chittenden and Nicos Michaelas
This paper documents the findings from an extensive postal survey conducted in 1997‐98, which looks at the tax affairs of small firms, both incorporated and unincorporated. Tax…
Abstract
This paper documents the findings from an extensive postal survey conducted in 1997‐98, which looks at the tax affairs of small firms, both incorporated and unincorporated. Tax planning practices of small firms in the UK, and the implications of these practices on working capital and investment in these businesses, are considered. The results indicate that tax planning in most small firms is not very sophisticated and this has an effect on investment decisions in these businesses. As a result of poor tax planning practices small firms are not in a position to utilise fully all available tax reduction mechanisms. Instead they have to rely on mechanisms that can be decided upon after the accounting year end; unfortunately these involve the withdrawal of money from the business (eg pension schemes, salaries/bonuses). The results presented in this paper illustrate that the decision concerning the level of pension fund contributions and drawings/salaries, and subsequently the level of retained profits, will depend on both financial (business needs and market characteristics) as well as non‐financial (management characteristics) factors. However, the present combination of these factors in the small business sector favours the extraction of profits out of the business rather than the reinvestment of profits that will enhance the creation of wealth and employment. Based on the beliefs and expectations of small business owner/directors a number of tax incentives are discussed that the government could introduce in order to enhance the financial development and prosperity of small firms.
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There has been a trickle of recent evidence that the current recession is coming to an end. From a number of perspectives it may be argued that it is fortunate that the pace of…
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There has been a trickle of recent evidence that the current recession is coming to an end. From a number of perspectives it may be argued that it is fortunate that the pace of recovery from the longest post‐war recession is faltering and slow. How can slow recovery from the longest recession since the war be welcome when almost 44% of the small businesses responding to the National Westminster Bank / Small Business Research Trust surveys report low turnover or lack of business as the major constraint, with the smallest businesses being affected most? The reason is that the economic and social policy cocktail which offers the prospect of sustained growth has yet to be discovered in the UK, if indeed such policies exist. Over the past thirty years (excluding the oil shock of the early 1970s) two periods of decline in real GDP have occurred, both since 1980 (Budget Statement 1990/1). It thus appears that the downside swings in the economy are becoming more pronounced. Recent reductions in interest rates are helpful in encouraging recovery but policies which smooth rather than accentuate fluctuations in the levels of economic activity are what is really required. These policies need to be established within the context of a strategy for managing the UK economy. Such a strategy must incorporate the role of small firms which, as recent evidence shows, continue to be a very important segment of industry and commerce despite the ravages of recession.
Francis Chittenden and Martyn Robertson
The past few months have seen the publication, by both the Conservative and Labour Parties, of statements of industrial strategy (HMSO 1994, The Labour Party 1994). It is…
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The past few months have seen the publication, by both the Conservative and Labour Parties, of statements of industrial strategy (HMSO 1994, The Labour Party 1994). It is interesting to note that, although TECs and LECs are referred to in both of the main parties' strategies, the Business Link initiative is only referred to in ‘Competitiveness: helping businesses to win’ (HMSO 1994). This White Paper refers intermittently to the original and newly extended role of the DTI sponsored Business Links. The Labour Party strategy makes no reference whatsoever, although they are preparing a further policy statement on small firms which may clarify the position.
Naresh R. Pandit, Gary A.S. Cook, David Milman and Francis C. Chittenden
This paper focuses on the British company voluntary arrangement (CVA) which is a relatively new debtor rehabilitation process particularly intended to help financially troubled…
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This paper focuses on the British company voluntary arrangement (CVA) which is a relatively new debtor rehabilitation process particularly intended to help financially troubled small firms resolve their difficulties. Based on a survey that is the largest and most comprehensive on the subject of British CVAs, this paper has three principal objectives: (i) to outline the characteristics of CVAs; (ii) to examine the relationships between CVA success and context; and (iii) to provide managerial and policy recommendations based on these findings. Among other things, the study finds that the overwhelming majority of CVAs are employed by small firms and that they can be particularly successful as a means of recovery when the economic fundamentals of the business are sound, regardless of the line of activity of the firm. Higher levels of success might be achieved, however, if the fixed costs of CVAs were subsidised in the case of very small firms and if more time were allowed during the process.
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Nicos Michaelas, Francis Chittenden and Panikkos Poutziouris
Although earlier capital structure theories, grounded within the finance paradigm (agency theory, transaction cost theory etc), have contributed to a deeper understanding of the…
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Although earlier capital structure theories, grounded within the finance paradigm (agency theory, transaction cost theory etc), have contributed to a deeper understanding of the capital structure puzzle, recent efforts suggest that research for the missing pieces of the puzzle should continue. This paper considers that these missing pieces of the puzzle could be diverse non‐financial and behavioural factors influencing capital structure decisions, that have received relatively little attention from finance researchers. The paper reports on an exploratory attempt to use interview techniques for the study of capital structure in small firms. Interviews can provide evidence about non‐financial and behavioural variables that quantitative analysis cannot. The paper develops a model for understanding capital structure decision making in small firms. It analyses the responses of small business owners/managers concerning the management of the financial structure of their firms and the factors that influence their capital structure decisions. Small business owners’ responses indicate that although a number of different financial variables may affect their capital structure decisions, other non‐financial and behavioural factors such as the need for control, risk propensity, experience, knowledge and goals may be more important in influencing the capital structure of their firms, at any time. The results indicate that significant progress in understanding the factors that influence capital structure may be achieved if financial researchers incorporate management theory in their studies, so that financial as well as non‐financial and behavioural factors are explored.
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Robert D. Hisrich and Barra O’Cinneide
Since 1980, there has been an increasing interest in the area of innovation, entrepreneurship and economic development. While the role of educational institutions in the…
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Since 1980, there has been an increasing interest in the area of innovation, entrepreneurship and economic development. While the role of educational institutions in the entrepreneurship/new venture creation process has been recognized, little research has been done, particularly outside the US, to identify the type and extent of involvement in this area by these institutions. Looks at the activities of European third‐level educational institutions in Western Europe, Sweden, Finland, Eastern and Central Europe, and some of the Republics of the former USSR. Universities in these geographic areas were surveyed regarding the extent (if any) of their activities in four primary areas of entrepreneurship: educational programmes; training programmes; research; and enterprise formation. There were 109 of the 227 institutions from 23 countries which responded ‐ a 48 per cent response rate. Institutions were more inclined to be involved in research than education, training and actual venture creation.
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In its passage through the Grand Committee the Food Bill is being amended in a number of important particulars, and it is in the highest degree satisfactory that so much interest…
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In its passage through the Grand Committee the Food Bill is being amended in a number of important particulars, and it is in the highest degree satisfactory that so much interest has been taken in the measure by members on both sides of the House as to lead to full and free discussion. Sir Charles Cameron, Mr. Kearley, Mr. Strachey, and other members have rendered excellent service by the introduction of various amendments; and Sir Charles Cameron is especially to be congratulated upon the success which has attended his efforts to induce the Committee to accept a number of alterations the wisdom of which cannot be doubted. The provision whereby local authorities will be compelled to appoint Public Analysts, and compelled to put the Acts in force in a proper manner, and the requirement that analysts shall furnish proofs of competence of a satisfactory character to the Local Government Board, will, it cannot be doubted, be productive of good results. The fact that the Local Government Board is to be given joint authority with the Board of Agriculture in insuring that the Acts are enforced is also an amendment of considerable importance, while other amendments upon what may perhaps be regarded as secondary points unquestionably trend in the right direction. It is, however, a matter for regret that the Government have not seen their way to introduce a decisive provision with regard to the use of preservatives, or to accept an effective amendment on this point. Under existing circumstances it should be plain that the right course to follow in regard to preservatives is to insist on full and adequate disclosure of their presence and of the amounts in which they are present. It is also a matter for regret that the Government have declined to give effect to the recommendation of the Food Products Committee as to the formation of an independent and representative Court of Reference. It is true that the Board of Agriculture are to make regulations in reference to standards, after consultation with experts or such inquiry as they think fit, and that such inquiries as the Board may make will be in the nature of consultations of some kind with a committee to be appointed by the Board. There is little doubt, however, that such a committee would probably be controlled by the Somerset House Department; and as we have already pointed out, however conscientious the personnel of this Department may be—and its conscientiousness cannot be doubted—it is not desirable in the public interest that any single purely analytical institution should exercise a controlling influence in the administration of the Acts. What is required is a Court of Reference which shall be so constituted as to command the confidence of the traders who are affected by the law as well as of all those who are concerned in its application. Further comment upon the proposed legislation must be reserved until the amended Bill is laid before the House.
Francis A. Buttle and Michael Ross Jayne
This paper utilises the findings from the largest‐ever national, omni‐sectoral survey into the impacts of ISO 9000 on UK business and specifically examines the real estate sector…
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This paper utilises the findings from the largest‐ever national, omni‐sectoral survey into the impacts of ISO 9000 on UK business and specifically examines the real estate sector, contrasting the findings with those found for the larger universe. Analysis across all sectors shows that while companies’ expectations of ISO 9000 are not met in full, they are generally satisfied with the contribution made to their organisation. While the real estate sector differs in points of detail from the larger universe, statistical analysis indicates that there are no significant differences.
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This paper adopts a critical perspective in seeking to inquire how TQM‐related models, developed initially in large organisations, are applied in the SME context. Using a grounded…
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This paper adopts a critical perspective in seeking to inquire how TQM‐related models, developed initially in large organisations, are applied in the SME context. Using a grounded inductive approach, a study is made of 20 SME cases, where a quality model, the balanced scorecard, has been applied. A grounded model is derived which shows the critical factors in regard to the principles of TQM, when quality models are applied in an SME context. The findings indicate TQM, when a quality model is applied in an SME context. The findings indicate that SMEs can be compromised by the mechanistic and formalised nature of such models, which the SMEs consider as adding bureaucracy, while needing to remain flexible and innovative in a very dynamic environment over which they have little control.
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Presents survey results which are derived from the most comprehensive investigation ever undertaken of UK companies certificated to ISO 9000. Reports an analysis of the…
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Presents survey results which are derived from the most comprehensive investigation ever undertaken of UK companies certificated to ISO 9000. Reports an analysis of the willingness of certificated companies to recommend the standard to other, similar companies. States that the 4,250 certificated organizations mail surveyed, 1,220 (28.7 per cent) responded. Indicates that the companies most willing to recommend ISO 9000 were those most satisfied with the organizational impacts of the standard and these were of three major kinds: profitability impacts, process improvements and marketing benefits. Reports that companies also willing to recommend were those whose expectations had been met, and those who believed the standard to be cost‐effective. Proposes that these results should help deflect criticism about the perceived value of the standard, and motivate companies to pursue certification.