Michael C. Ehrhardt and James M. Reeve
Traditional approaches to capital budgeting may be inadequate in today's complex business environment. This paper identifies problems with a narrow approach to capital budgeting…
Abstract
Traditional approaches to capital budgeting may be inadequate in today's complex business environment. This paper identifies problems with a narrow approach to capital budgeting and suggests several improvements. In particular, an example illustrates an option‐based approach to valuing managerial flexibility.
Robert A. Kunkel, Michael C. Ehrhardt and Gregory A. Kuhlemeyer
Outlines previous research on the relationship between dividend policy and stock returns; and uses a linear programme and multi‐index model to form an investment strategy to see…
Abstract
Outlines previous research on the relationship between dividend policy and stock returns; and uses a linear programme and multi‐index model to form an investment strategy to see whether dividend yields increase stock returns. Explains the methodology, tests it on 1965‐1989 US data and presents the results, which suggests that the multi‐index model is superior to the single index market model in terms of explanatory power and volatility; but provides conflicting conclusions on the relevance of dividends to stock returns. Suggests that the negative relationship between dividends and stock returns can be explained by Jensen’s (1986) free cash flow theory and the influence of transaction costs.
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Janis K. Zaima, Howard F. Turetsky and Bruce Cochran
Studies that examine the relationship of economic value added (EVA) to market value did not isolate the EVA effect in conjunction with controlling for the economic effect of the…
Abstract
Studies that examine the relationship of economic value added (EVA) to market value did not isolate the EVA effect in conjunction with controlling for the economic effect of the market. Since the EVA metric is viewed as value‐added apart from the market, operational managers will benefit from a procedure that separates the market driven versus firm driven (EVA) effects. Our paper examines the effects of the economy and EVA on MVA. The results indicate that EVA and GDP significantly affect MVA. Furthermore, the MVA‐EVA relationship shows a systematic bias between the largest MVA firms and the smallest MVA firms. Overall, our study provides implications for corporate executives utilizing EVA to evaluate managerial performance linked to MVA.
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Michael Kaku Minlah, Xibao Zhang, Philipine Nelly Ganyoh and Ayesha Bibi
This study investigates the existence of the environmental Kuznets curve (EKC) for deforestation for Ghana over the 1962–2018 the time period.
Abstract
Purpose
This study investigates the existence of the environmental Kuznets curve (EKC) for deforestation for Ghana over the 1962–2018 the time period.
Design/methodology/approach
The study employs a time-varying approach, the bootstrap rolling window Granger causality test to achieve its set objectives.
Findings
The results from our study reveals an inverted “N” shape EKC for deforestation, implying that deforestation will initially decrease with increases in economic growth up to a certain income threshold and increases with further increases in economic growth beyond this income threshold up to a higher income threshold and then decrease with further increases in economic beyond the higher income threshold.
Practical implications
The results from the study project show that over time economic growth can serve as a natural panacea to cure and mitigate the ills of deforestation that have plagued Ghana's forests over the years.
Social implications
The results further highlight the important role of strong institutions in fighting the deforestation menace.
Originality/value
The originality of this study lies in its methodology which allows for feedback from deforestation to the economy. This is in contrast to earlier studies on the EKC for deforestation which allowed causality only from deforestation to the economy.
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Richard York, Eugene A. Rosa and Thomas Dietz
Ascientific consensus has emerged indicating that the global climate is changing due to anthropogenic (i.e., human induced) driving forces. Our previous research reformulated the…
Abstract
Ascientific consensus has emerged indicating that the global climate is changing due to anthropogenic (i.e., human induced) driving forces. Our previous research reformulated the well‐known I=PAT (environmental Impacts equal the multiplicative product of Population, Affluence, and Technology) model into stochastic form, named it the STIRPAT model, and used it to assess the effects of population and affluence on carbon dioxide loads. Here we extend those findings by examining the impacts of population, affluence and other factors on the emissions of the greenhouse gases (GHGs) methane (CH4) and carbon dioxide (CO2), as well as the combined global warming potential of these two gases. We also assess the potential for “ecological modernization” or an “environmental Kuznets curve” (EKC) effect to curb GHG emissions. Our findings suggest that population is a consistent force behind GHG emissions, that affluence also drives emissions, that urbanization and industrialization increase emissions, and that tropical nations have lower emissions than non‐tropical nations, controlling for other factors. Contrary to what ecological modernization and EKC theorists predict, we find that to date there is no compelling evidence of a decline in emissions with modernization. These results support both the “treadmill of production” thesis and the “metabolic rift” thesis.
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Alex Stewart and Michael A. Hitt
Are the social domains of kinship and business on balance complementary or contradictory? Do ventures that invest heavily in both – conventionally referred to as “family firms” �…
Abstract
Are the social domains of kinship and business on balance complementary or contradictory? Do ventures that invest heavily in both – conventionally referred to as “family firms” – bear a net gain or net loss? We are scarcely the first to raise these questions. How then will we try to contribute to an answer? We try this in five ways, all of them based on previous literature. First, we develop the dichotomy of kinship and business by taking seriously the metaphor of yin and yang, merging it with the anthropological constructs of structural domains such as “domestic” and “public.” This metaphor proves to shed light on the relevant literature. Second, we provide a qualitative survey of the costs and benefits of kinship in business. Third, we summarize the empirical work that addresses the performance outcomes from family involvement. Fourth, we consider the practitioner implications of these studies. Finally, we ask if scholars are as yet in a position to answer these questions.
David DeBoeuf, Hongbok Lee, Don Johnson and Maksim Masharuev
The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The…
Abstract
Purpose
The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The expected return, required return structure of the proposed purchasing power return (PPR) methodology eliminates the many flaws associated with the competing internal rate of return (IRR) and modified IRR (MIRR) techniques.
Design/methodology/approach
The authors provide a new framework for examining long-term investment projects through a percentage return prism. Unlike that of IRR and MIRR, mathematical consistency with net present value (NPV) is a design requirement.
Findings
PPR eliminates the many flaws found in the IRR and MIRR methodologies, is mathematically consistent with NPV, and identifies positive-NPV investments forecasted to reduce the company’s purchasing power. These projects are acceptable under NPV, but flagged for additional review and potential rejection. Created to examine projects on a percentage return basis, PPR employs market-based inflation rates to convert all cash flows into constant purchasing power units of measure. From these units, an expected real return is estimated and compared to the project’s inflation-adjusted required return, resulting in an accept/reject decision consistent with that of NPV.
Originality/value
The proposed PPR is a new paradigm of capital investment appraisal that eliminates the many problems found in the IRR and MIRR techniques, is mathematically consistent with the NPV method, and helps financial decision makers examine investment projects on an expected percentage return basis. PPR also flags for further review projects expected to actually reduce the company’s purchasing power.
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Michael Adesi, De-Graft Owusu-Manu and Roisin Murphy
Professional quantity surveying (QS) services are critical to successful delivery of construction projects within planned budget, quality and duration. The supply of QS…
Abstract
Purpose
Professional quantity surveying (QS) services are critical to successful delivery of construction projects within planned budget, quality and duration. The supply of QS professional services is largely dependent on the price level of services and the willingness of clients to pay. The pricing of professional QS consultancy services has been confronted with a myriad of pricing challenges due to rapid changes in the business environment; the pervasive influence of information technology; and the complexity of clients’ expectation. It is therefore necessary for QS consultancy firms to develop strategic competences for the pricing of their services. In addition, numerous studies have not given the pricing the pricing of professional services the requisite attention. The purpose of this paper is to investigate the strategic competences for pricing professional QS services.
Design/methodology/approach
The study was positioned within the positivist tradition. As a result, the quantitative approach was adopted using a survey questionnaire to collect data from QS consultants. The sample size of the study was 79 professional quantity surveyors chosen by using simple random sampling technique from a population of 372 registered professional QS of the Ghana Institution of Surveyors. Using the χ2 test and factor analysis, the study established relationship between strategic competences and pricing of QS services.
Findings
The study found that strategic competences for pricing QS professional services is significantly related to the managerial and professional competence of QS consultants. The strategic competences of QS consultants identified by this study include business management, services cost management; and production capabilities.
Practical implications
This study provides an empirical basis for QS consultancy firms to focus on strategic direction of their contractual arrangement with clients. Practically, resource configuration and on strategic competences for professional service pricing would create price leadership.
Originality/value
The study advances the pricing knowledge within the QS practice by demonstrating the nexus between strategic competences and the pricing of QS professional services which hitherto this study have not been effectively investigated.
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Jianyao Jia, Yang Li, Xueqing Gan and Guofeng Ma
In today's digital and post-pandemic era, construction teams can span their boundary to obtain important resources and support in computer-mediated ways. However, the benefits of…
Abstract
Purpose
In today's digital and post-pandemic era, construction teams can span their boundary to obtain important resources and support in computer-mediated ways. However, the benefits of computer-mediated team boundary spanning (TBS) are mostly assumed. Empirical evidence for these benefits is in lack. Thus, this study attempts to investigate the influence of computer-mediated (instant messaging in this study) TBS on construction project performance and the underlying mechanism.
Design/methodology/approach
From the multiteam system (MTS) perspective, this study employs the input-process-outcome (IPO) framework and coordination theory to explore the influence of instant messaging-based team boundary spanning (IMTBS) on construction project coordination processes and project performance. A theoretical model is built and validated with a survey involving 206 construction projects.
Findings
Results show that IMTBS positively affects knowledge integration and project coordination, but negatively affects project commitment. The positive link between IMTBS and project performance is attributable to knowledge integration and project coordination. Further, project commitment is also found to negatively mediate the relationship between IMTBS and construction project performance.
Originality/value
To the best of the authors’ knowledge, this study is the first to empirically investigate the influence of TBS on construction project performance. As such, this study contributes to the literature on TBS in the construction field. In addition, the findings of this study unveil the double-edged characteristic of IMTBS, which should attract managers' attention. This also indicates that the form of TBS is a significant determinant of its effectiveness, which should attract scholars' attention in the future.
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THE Deutsche Versuchsanstalt für Luft‐fahrt—known for short as the D.V.L.—at Berlin‐Adlershof, is the central establishment for aeronautical research in Germany. Hitherto the…
Abstract
THE Deutsche Versuchsanstalt für Luft‐fahrt—known for short as the D.V.L.—at Berlin‐Adlershof, is the central establishment for aeronautical research in Germany. Hitherto the D.V.L. had as its special prerogative the testing of aircraft and aero‐engines for certificates of airworthiness. Since April 1, 1933, the Inspection Department has passed under the authority of the “Reichsamt für Flugsicherung” (Air Security Board), but it has not actually been separated from the D.V.L., continuing to have its premises at the D.V.L. establishment. (Further details of the Inspection Department are given later.)