The purpose of this article is to expose the Miller‐Modigliani 1961 Ponzi scheme that has masqueraded as a dividend irrelevance proof, and show that it constituted a Ponzi scheme…
Abstract
Purpose
The purpose of this article is to expose the Miller‐Modigliani 1961 Ponzi scheme that has masqueraded as a dividend irrelevance proof, and show that it constituted a Ponzi scheme at the time of publication and ever since publication. This is important especially as Miller‐Modigliani 1961 stated in the first sentence of their article that their dividend irrelevance proof was targeted at corporate officials, investors and economists seeking to undertake and appraise the functioning of capital markets.
Design/methodology/approach
The equations and notation used by Miller‐Modigliani 1961 to prove dividend irrelevance were carefully considered and analysed in order to establish whether proof reliably, validly and unambiguously proved dividend irrelevance. In addition, statute on both sides of the Atlantic, UK and USA, was considered in order to ascertain the legal standing of their proof.
Findings
This article shows that the Miller‐Modigliani 1961 dividend irrelevance proof constituted a recipe for a Ponzi scheme in terms of statute at the time of publication and ever since publication. Since Miller‐Modigliani 1961 made extensive reference to the works of eminent finance researchers and academics of the 1930s, 1940s, and 1950s, as well as to their Modigliani‐Miller 1958 seminal article, and attentively present and discuss the intricacies of the arguments these researchers made to the progression of knowledge, it would be challenging to content that they were unaware or ignorant of important legislation that applied in 1961.
Originality/value
There is no evidence from a scrutiny of publicly available secondary sources to suggest that the Miller‐Modigliani 1961 Ponzi scheme, alias “dividend irrelevance” has previously been done or published. This is surprising because the Miller‐Modigliani 1961 dividend irrelevance proof has occupied a particularly prominent position in the finance literature and has been the subject of numerous studies and research projects.
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The purpose of this paper is to offer a viewpoint on the 1961 scientific method and research methodology used by Miller and Modigliani to derive the conclusion that dividends are…
Abstract
Purpose
The purpose of this paper is to offer a viewpoint on the 1961 scientific method and research methodology used by Miller and Modigliani to derive the conclusion that dividends are irrelevant, with reference to the UK Companies Act of 2006, specifically Sections 829‐840 that concern distributions, and Section 172 that stipulates the duties of the directors in their promotion of the success of the company.
Design/methodology/approach
The relevant sections of the UK Companies Act of 2006 concerning distributions and the duty of directors to promote the success of the company were studied. It was followed by a detailed analysis of the article by Miller and Modigliani, in particular the purpose, assumptions, the 30 equations that comprise their model, and their interpretive logic in drawing conclusions from their equations.
Findings
In effect, Miller and Modigliani exclude dividends as a determinant of share value, side‐step the purpose of their research, do not state assumptions upon which their analysis and interpretations are reliant, and disregard the conceptual difference between income and capital. On the basis of their interpretive logic not only is the dividend decision irrelevant but so too is the financing decision and important aspects of company law. Nonetheless, the erroneous doctrinal view that is presented by Miller and Modigliani continues to have obstinately resolute adherents, as evidenced by its uncritical presentation in authoritative textbooks on financial management.
Originality/value
This paper's view is that the continued uncritical presentation of Miller and Modigliani cannot be justified as an approach consistent with sound research methodology.
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As a consequence of the global financial crisis and widespread disquiet over executive bonuses and other remuneration, in April 2009 the Financial Stability Forum enunciated…
Abstract
Purpose
As a consequence of the global financial crisis and widespread disquiet over executive bonuses and other remuneration, in April 2009 the Financial Stability Forum enunciated principles for sound compensation as part of an effort to ensure the effective governance of compensation. The core problem this article seeks to address is the measurement of the contribution of corporate executives to the intrinsic value of the firm as part of an initial step in the process of implementing the Financial Stability Forum's principles. Unless the contribution of corporate executives can be measured in a manner that satisfies the requirements of sound research methodology, rigorous epistemology, and statutory requirements, it is doubtful whether these principles can be operationalized. Thus, the purpose of this paper is to show how the contribution of corporate executives can be estimated from audited financial statements. From the core problem and purpose of this article, its title is drawn.
Design/methodology/approach
Relevant sections of the report of the Financial Stability Forum 2009, the UK Corporate Governance Code of 2010, and the UK Companies Act of 2006, in conjunction with important reviews such as the Turner Review of 2009 and the Walker Review of 2009 were studied. Data inputs from audited financial statements were applied to appropriate well‐established non‐controversial valuation equations that are based on “first‐principles” of corporate finance, and the contribution of corporate executives to the intrinsic value of the firm was estimated in order to illustrate the validity of this approach.
Findings
The paper shows that contribution to the intrinsic value of the firm made by corporate executives can be measured in a non‐controversial and transparent way, and once done, can form the basis for quantifying executive remuneration on the basis of valued‐added. No attempt is made to address the fractional share of value‐added that should be placed in a bonus‐pool.
Originality/value
From an extensive survey of publicly available literature, there is no evidence to suggest that the measurement of the contribution of corporate executives to the intrinsic value of the firm, as part of an initial step in the process of implementing the principles of the Financial Stability Forum 2009, has yet been published.
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A new form of “museum” has emerged which takes advantage of theInternet′s seemingly limitless format options for electronicpresentation and ability to tailor in‐depth…
Abstract
A new form of “museum” has emerged which takes advantage of the Internet′s seemingly limitless format options for electronic presentation and ability to tailor in‐depth presentations to niche audiences. Constraints of ownership and geographic location are lessened as Internet‐based museums point to sources across the globe. Collections which are physically impossible to construct are being mounted electronically. Offers a sampler of museums and galleries around the world which are making use of WorldWide Web or Gopher servers.
Guilherme Dayrell Mendonça, Stanley Robson de Medeiros Oliveira, Orlando Fontes Lima Jr and Paulo Tarso Vilela de Resende
The objective of this paper is to evaluate whether the data from consignors, logistics service providers (LSPs) and consignees contribute to the prediction of air transport…
Abstract
Purpose
The objective of this paper is to evaluate whether the data from consignors, logistics service providers (LSPs) and consignees contribute to the prediction of air transport shipment delays in a machine learning application.
Design/methodology/approach
The research database contained 2,244 air freight intercontinental shipments to 4 automotive production plants in Latin America. Different algorithm classes were tested in the knowledge discovery in databases (KDD) process: support vector machine (SVM), random forest (RF), artificial neural networks (ANN) and k-nearest neighbors (KNN).
Findings
Shipper, consignee and LSP data attribute selection achieved 86% accuracy through the RF algorithm in a cross-validation scenario after a combined class balancing procedure.
Originality/value
These findings expand the current literature on machine learning applied to air freight delay management, which has mostly focused on weather, airport structure, flight schedule, ground delay and congestion as explanatory attributes.
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Steven Cox, Virginia Elton, John A. Garside, Apostolos Kotsialos, João Victor Marmo, Lorena Cunha, Grant Lennon and Chris Gill
A process improvement sampling methodology, known as process variation diagnostic tool (PROVADT), was proposed by Cox et al. (2013). The method was designed to support the…
Abstract
Purpose
A process improvement sampling methodology, known as process variation diagnostic tool (PROVADT), was proposed by Cox et al. (2013). The method was designed to support the objectivity of Six Sigma projects performing the measure-analyse phases of the define-measure-analyse-improve-control cycle. An issue in PROVADT is that it is unable to distinguish between measurement and product variation in the presence of a poor Gage repeatability and reproducibility (R&R) result. The purpose of this paper is to improve and address PROVADT’s sampling structure by enabling a true Gage R&R as part of its design.
Design/methodology/approach
This paper derives an enhanced PROVADT method by examining the theoretical sampling constraints required to perform a Gage R&R study. The original PROVADT method is then extended to fulfil these requirements. To test this enhanced approach, it was applied first to a simulated manufacturing process and then in two industry case studies.
Findings
The results in this paper demonstrates that enhanced PROVADT was able to achieve a full Gage R&R result. This required 20 additional measurements when compared to the original method, but saved up to ten additional products and 20 additional measurements being taken in future experiments if the original method failed to obtain a valid Gage R&R. These benefits were highlighted in simulation and industry case studies.
Originality/value
The work into the PROVADT method aims to improve the objectivity of early Six Sigma analyses of quality issues, which has documented issues.
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Natalia Diniz-Maganini and Abdul A. Rasheed
When investors experience extreme uncertainty, they seek “safe havens” to reduce their risk, to limit their losses and to protect the value of their portfolios. The purpose of…
Abstract
Purpose
When investors experience extreme uncertainty, they seek “safe havens” to reduce their risk, to limit their losses and to protect the value of their portfolios. The purpose of this paper is to examine the safe-haven properties of Bitcoin compared to the stock market.
Design/methodology/approach
Based on intraday data, this study compares the price efficiencies of Bitcoin and Morgan Stanley Capital Index (MSCI) using Multifractal Detrended Fluctuation Analysis for the second half of 2020. This study then evaluates Bitcoin’s safe-haven property using Detrended Partial-Cross-Correlation Analysis (DPCCA).
Findings
This study finds that the price efficiency of Bitcoin is lower than that of MSCI. Further, Bitcoin was not a safe haven at any time for the MSCI index. The net cross-correlations between Bitcoin and MSCI are weak and they vary at different time scales.
Research limitations/implications
The behavior of market prices varies over time. Therefore, it is important to replicate this study for other time periods.
Social implications
The paper sheds light on the price behavior of Bitcoin during a period of instability. The results suggest that the construction of portfolios should differ based on the time horizons of the investors.
Originality/value
The authors compare Bitcoin against a global equity index instead of a specific country index or commodity. They also demonstrate the applicability of DPCCA in finance research.
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This chapter analyzes the role of new local planning frameworks in the development of urban megaprojects (UMPs). It argues that the way projects are integrated with existing…
Abstract
This chapter analyzes the role of new local planning frameworks in the development of urban megaprojects (UMPs). It argues that the way projects are integrated with existing planning controls and statutory procedures influences how its costs and benefits are distributed. Drawing on the case studies of the Special Hudson Yards District in New York City, the “Zone d’Amenagement Concerte Clichy-Batignolles” in Paris and the Operacao Urbana Agua Branca in Sao Paulo, it compares how the legislative reforms and strategic plans enacted in each city impacted development programs, implementation process, and public benefits delivered by each project. This is a comparative case study analysis using quantitative and qualitative data collected through planning documents, press articles, interviews, and field research on the planning process of the three case studies, their administrative and institutional frameworks focused combined with quantitative analysis of the development proposals and outcomes of each project. The research shows how the articulation between the new plans and the underlying zoning districts as well as willingness by the city to commit public funds to finance the required upfront investments influence the ability of cities to extract public benefits from urban megaprojects and improve integration with surrounding neighborhoods, transport infrastructure, and regional policy. Based on a succinct review of the related literature the chapter illustrates the evolving role of public agencies and land-use regulation in the development of UMPs, illustrates the material expression of strategic planning on legislative reform and policy statements, provides a comparative analysis of contrasting legal systems, and suggests policy formulations that can improve the “public return” generated by UMPs.