Volume 07 Number 02
The Relative Importance Of Corporate Governance Characteristics: An Audit Perspective
Dennis M. Hanno and Chris Agoglia
While there is an increasing focus on the need to develop corporate governance best practice models (e.g., OECD, 1998), there is little research to guide the process. This study addresses that need by analyzing the judgments of U.S. auditors with experience and expertise in evaluating governance characteristics. Using a realistic case developed from the working papers of an actual audit client, auditors performed several audit judgments and evaluated the importance of various corporate governance factors to their decisions. The results indicate that the auditors found two factors to be more important to their judgments than the others they considered: management's philosophy and operating style and the entity's integrity and ethical values. Implications of the results for the development of a best practice model are discussed.
Benchmark Models On Ownership And Efficiency
Yun Hsing (Y.H.) Cheung
This paper constructs two full-information benchmark models to examine the issue of ownership and efficiency: one model is for state owned enterprises and the other model is for private enterprises. Internal efficiency is captured by Gravelle's rule of X-efficiency. Allocative efficiency is measured by the price of the product equal to its marginal cost.
This paper follows the political influence approach in recognising the innate nature of ademocratically elected government to garner political support through its policy decisions. What is new in this paper is the consideration of the impact of a semisoft budget, which is soft up to a certain point. It is found that state owned enterprises are likely to be allocatively inefficient in nature but still relatively more allocatively efficient than private counterparts. This result is contrary to the results of other benchmark models: namely, that state owned enterprises are allocatively efficient. The result also demonstrates that asymmetric information, property rights (or residual claims), and risk-averse managers are not prerequisites to allocative inefficiency.
Furthermore, the benchmark models indicate that public ownership is superior to private ownership because, while both kinds of enterprises share internal efficiency, state owned enterprises are likely to be allocatively less inefficient than private enterprises.
US-Dollar Exchange Rates And Stock Returns Of Asia-Pacific Markets
Kie Ann Wong, Renbao Chen, and Wignarajah Jayakanth
This study examines the exchange rate exposure of stock markets using daily data of nine Asia-Pacific markets from 1990 to August 1998. We find that all the markets exhibit significant exchange rate exposure with respect to US-dollar rate movements. Moreover, the exchange rate returns tend to reinforce rather than offset the stock returns. The difference in exchange rate exposure across Asia-Pacific markets during normal time is likely to be related to the foreign trade structure of a country and the extent of foreign participation in its stock market, which in turn is influenced to some extent by foreign exchange control and foreign ownership restrictions. However, the exposure of stock returns to US-dollar rate movements has increased substantially during the sub-period of Asian financial crisis which makes the results not directly comparable with those of the sub-periods before the crisis.
Multiple Criteria ABC Analysis Using The Analytic Hierarchy Process: An Application To Hospital Inventory Management
Shams-ur Rahman
Application of single criterion ABC analysis based on annual dollar usage value may not be appropriate in many situations. There are several non-cost criteria which may represent important considerations for the management of inventory in service organisations. In this paper an attempt has been made to implement multiple criteria ABC analysis at a hospital-based respiratory therapy department using the analytic hierarchy process (AHP).
THE REACTION OF TRADING VOLUME TO THE RELEASE OF INTERIM FINANCIAL REPORTS : SOME UNITED KINGDOM EVIDENCE
Kwaku K. Opong
This paper examines the response of trading volume to the release of interim financial reports in the United Kingdom using data from January 1992 to 31stDecember 1994. The paper provides further evidence on the information content of interim financial reports using trading volume as a measure of information content. The results of the study indicate that interim financial reports have information that affect trading volume on the London Stock Exchange on the day prior to the release of the interim financial report. The results of the study also indicate that firm size is inversely related to volume reaction.