Related party transactions and audit fees: the role of the internal audit function

Related party transactions (RPTs) are viewed as genuine transactions that rationally fulfil other economic demands of a company. However, RPTs can also be used to transfer wealth from minority shareholders to controlling shareholders. The existence of such transactions may deteriorate financial reporting quality, increase audit risk, and as a result increase audit fees. This study examines the relationship between RPTs and audit fees in Malaysia, where ownership is often concentrated within a controlling family and corporate governance mechanisms are poor. It also investigates the moderating effect of the internal audit function (IAF) on this relationship. We find that external auditors base their fees on the types of RPTs undertaken. Specifically, our results show that audit fees are higher for firms that undertake RPTs involving the sale and purchase of assets, goods, and services. We also document that external auditors rely on the IAF, and thus their fees are lower for firms that undertake RPTs and that have made a large investment in an IAF. Our study is the first to provide evidence that RPTs in Malaysian firms may be abused as a channel to facilitate tunnelling and that the IAF plays a vital role in controlling such transactions.     

Process Mean Determination with Quantity Discounts in Raw Material Cost*

Setting the mean (target value) for a container-filling process is an important decision for a producer when the material cost is a significant portion of the production cost. Because the process mean determines the process conforming rate, it affects other production decisions, including, in particular, the production setup and raw material procurement policies. In this paper, we consider the situation in which quantity discounts exist in the raw material acquisition cost, and incorporate the quantity-discount issue into an existing model that was developed for simultaneously determining the process mean, production setup, and raw material procurement policies for a container-filling process. The product of interest is assumed to have a lower specification limit, and the items that do not conform to the specification limit are scrapped with no salvage value. The production cost of an item is proportional to the amount of the raw material used in producing the item. A two-echelon model is formulated for a single-product production process, and an algorithm is developed for finding the optimal solution. A sensitivity analysis is performed to study the effects of the model parameters on the optimal solution.     

基于遗传算法的经济性参数设计

针对田口方法的不足,本文在双因子方法DRA(dualresponseapproach)的基础上从经济的角度讨论了参数设计问题。考虑产品规格界限及质量损失的不对称性,建立了经济性参数设计模型,并利用遗传算法(GA)得到了最经济的过程均值与波动方差。最后给出一个实例验证了此模型是可行的,有效的。     

Analyzing the dependences of multi-category purchases on interactions of marketing variables

We extend the usual specification of the multivariate probit model frequently used to analyze multi-category purchase incidence data by introducing interaction effects between marketing variables. Models are estimated by a Markov Chain Monte Carlo simulation method using 24,047 shopping visits made by a random sample of 1500 households in one specific grocery store over a one year period. Our data refer to a total of 25 food and non-food product categories and include socio-demographic household attributes in addition to purchases and marketing variables. Information criteria agree on the superiority of the extended specification. Estimation results demonstrate that many interaction effects are erroneously attributed to the main effects of marketing variables if one applies the usual specification instead. We derive managerial implications with respect to sales revenue by stochastic simulation. If managers base decisions on the usual specification in spite of its worse statistical performance, they run the risk to overestimate sales revenue increases due to sales promotion activities.     

Overall labour productivity indices in a multi-product multi-stage environment

A procedure for computing productivity indices in a complex case is demonstrated. When reliable data on the internal flow of materials is not available, external flows only are taken into account, assuming standard internal material proportions. The resulting indices point to the overall productivity and may serve as indicators of areas where a more detailed analysis is called for.     

嵌套并联结构两阶段DEA下科技创新效率测度与分解

目前有许多研究将两阶段DEA模型应用到科技创新活动当中,一般将创新活动分为研发和转化两个阶段,为了进一步探讨不同转移转化方式下科技成果的转化效率以获得更多的详细信息,本文拓展了传统的两阶段DEA模型,考虑了嵌套并联结构的两阶段网络DEA模型,将科技创新活动分为科技成果研发阶段和科技成果转化阶段,并将科技成果转化阶段分为内部转化和外部转化两个并联子系统。本文选取14家中科院院属单位作为被评价对象,应用加权加法分解方法计算整体效率和各阶段子效率。通过将本文模型与传统两阶段模型进行对比发现,传统模型会低估科技成果转化效率。结果表明：整体科技创新效率均值偏低,科技成果研发效率均值高于科技成果转化效率均值,科技成果转化效率仍有很大的提升空间。科技成果转化阶段中内部转化效率普遍较高但是外部转化效率普遍较低,较低的外部转化效率是导致科技成果转化效率低下的主要原因。最后,本文将所有被评价单位分为四类机构,分析提高科技创新效率的实现路径,可以通过重点突破模式和渐进突破模式来实现整体效率的提高。     

Additive slacks-based measure: Computational strategy and extension to network DEA

The current paper visits a set of data envelopment analysis (DEA) models that identify inefficiency by optimizing input and output slacks. These slacks are aggregated either in an additive or ratio form. Only the ratio slacks-based DEA models can be solved as a linear program and generate a DEA score between zero and unity. The additive slacks-based model can be equivalent to the Russell graph measure and converted into a second order cone programming (SOCP) problem whose solving procedure has become a mature technology. As such, the additive slacks-based model can also yield a DEA score between zero and unity. This study shows that the additive slacks-based model can be applied to modelling network DEA where the internal structures of decision making units (DMUs) are of interest. The additive slacks-based network DEA can be solved using SOCP technique and adapted to the preference of the decision maker by choosing the weights for aggregating individual components in the network structures. It is shown that the additive slacks-based approach can yield divisional efficiencies of Pareto optimal equivalences to be selected by the decision maker when compared to the existing ratio slacks-based measure. An example and solving codes are provided in the current study.     

Personality Development and Organizational Behavior

This chapter provides an overview of a new theoretical framework that serves to integrate personality psychology and other fields, such as organizational behavior. The first section describes a structural model of personality that incorporates traits, motives, abilities, and narratives, with social roles. The second section describes basic patterns of continuity and change in personality and how this might be relevant to organizational behavior. The third section describes the ASTMA model of person–organization transaction (attraction, selection, transformation, manipulation, and attrition), which describes the primary transactions between personality and organizational experiences across the life course. The goal for the chapter is to build a bridge between modern personality psychology and organizational behavior, such that the two fields can better inform one another.     

Relative capacity: Retaining knowledge outside a firm's boundaries

Besides internalizing external knowledge, companies may maintain knowledge in interfirm relationships over time. Thus, interorganizational relations may be regarded as an extended knowledge base to which a firm has privileged access. We merge research into knowledge management, absorptive capacity, learning, and dynamic capabilities to analyze knowledge retention outside a firm's boundaries. Prior research into knowledge management has focused on internally storing knowledge, whereas research into knowledge transactions has primarily studied the internalization of external knowledge. The need to dynamically manage knowledge in interfirm relations over time – without necessarily internalizing this knowledge – has been relatively neglected. Therefore, we develop the foundations of the dynamic capability-based concept of relative capacity as a complement to absorptive capacity and transformative capacity in external knowledge retention. Relative capacity contributes to explaining interfirm differences in knowledge strategies, alliance strategies, organizational boundaries, open innovation, and performance. To guide further research, propositions are advanced regarding the antecedents and consequences of relative capacity.     

Behaviour Modelling: Its Record and Potential in Training and Development

Behaviour modelling training is an approach to training systems design which has a strong conceptual base in social learning theory (Bandura, 1977). In the mid 1970s, Goldstein and Sorcher produced a now well-known book which described the application of behaviour-modelling techniques to supervisory training. In the last 15 years or so the conceptual basis of behaviour modelling has progressed (Bandura, 1986) and there has been a steady stream of studies (see Decker and Nathan, 1985; Goldstein and Gessner, 1988) investigating the use and potential of the approach in organizational settings. The first half of this article provides an overview of the conceptual basis for behaviour modelling training and examines the extent to which behaviour modelling practice provides a valid operationalization of underlying theory. The remainder of the article is concerned with issues of evaluation and applicability. Research on the use of behaviour-modelling techniques has shown consistently good reaction and learning data (i.e. trainees like the material and are able to learn from it). Evidence concerning the transfer of learning back to the job (i.e. behaviour change and organization impact) is much more equivocal. The available evidence is reviewed and used to produce an account of the record and potential of behaviour modelling training.     

The EFOM 12C energy supply model within the EC modelling system

This article describes the EC-EFOM 12C model in general and refers where possible to existing documentation. It also reports on the first completed experimental case study and on planned future analysis. This model was developed in one of the research programs undertaken by the European Commission aimed primarily at multinational studies. Data are obtained from research carried out by an interactive network of national implementation teams working with a central group at the Commission. The energy system used is an oriented network carrying the primary energy over intermediate stages till finally meeting consumers' demand. The numerical information, constituting the attributes that characterise the various energy transformation processes, is stored in the European energy data base. About 225 transformation processes distributed over 17 subsystems characterised for six time periods up till 2020 for all EC countries are involved. The management of the data base is performed by an interactive software and this data base is designed for use in simulation studies and for linear programming optimisation with various objective functions. The model has been used in a parallel case study to explore substitution possibilities between an investment policy reducing the primary energy imports and one where these investments are restrained at the cost of having to import more primary energy. Results are shown and briefly discussed. Finally the relationship of this EFOM 12C model with the other EC models developed in the same research subprogram is outlined.     

Supply chain management resources,capabilities and execution

This paper identifies inter- and intra-organisational management resources that determine the level of execution of inter-firm alliance supply chain management (SCM). By drawing on network and resource-based view theories, a conceptual model proposes the effects of SCM resources and capabilities as influencing factors on SCM execution. The model was tested using survey data from studies conducted in two European supply chain environments. Variance-based structural equation modelling confirmed the hypothesised hierarchical order of three proposed antecedents: internal SCM resources affect joint SCM resources, which in turn influence collaborative SCM-related processes and finally SCM execution. An importance-performance analysis for both settings shows that providing and investing in internal SCM resources should be a priority when aiming to increase SCM execution. The theoretical contribution of this paper lies in confirming that the improvement of SCM execution follows a clear pathway featuring internal supply chain resources as one of the main drivers. The practical implications of this research include the development of a prioritisation list of measures that elevate SCM execution in the two country settings.     

The syndication of venture capital investments

This paper examines competing finance, resource-based and deal flow explanations for the syndication of venture capital investments. Evidence from 60 firms (a 58.8% response rate) is analysed. Overall the finance perspective provides a strong explanation of motives for syndication, but the resource-based view is found to be much more important for those firms involved in at least some early stage transactions. The implications for researchers are that venture capital firms should not be treated as a homogeneous group and that the investment stages in which they operate may strongly influence attitudes towards syndication. In addition, there are implications for practitioners as venture capital firms may not be attributing sufficient attention to the need to augment their own resource base in order to enable them to make superior decisions when selecting deals and managing investments.     

内外部碳配额交易路径下供应链减排决策研究

供应链内外部碳配额交易是碳配额政策下供应链协调碳配额的重要途径,对供应链成员企业碳减排决策产生重要影响。本文以单供应商和单制造商组成的二级供应链为研究对象,在完善的碳配额交易市场情况下,通过构建供应链外部碳交易路径和内外部碳配额交易路径共存的博弈模型,分析了碳配额政策下内外部碳配额交易条件、企业减排策略和利润影响因素。研究结果表明,在外部碳交易路径下,供应链上、下游企业的减排决策相互影响,且当单位碳排放量和碳减排成本系数相等时,上游企业碳减排率是下游企业的两倍;同时进行内外部碳配额交易能降低中间产品批发价格,提高供应链成员企业碳减排率、增加企业利润。算例验证了结论的有效性,并发现企业碳配额和内部碳交易价格在一定区间内才能使内部碳交易达成,此时制造商会分担供应商的碳减排费用。     

The Econometrics of Ultra‐high‐frequency Data

Ultra‐high‐frequency data is defined to be a full record of transactions and their associated characteristics. The transaction arrival times and accompanying measures can be analyzed as marked point processes. The ACD point process developed by Engle and Russell (1998) is applied to IBM transactions arrival times to develop semiparametric hazard estimates and conditional intensities. Combining these intensities with a GARCH model of prices produces ultra‐high‐frequency measures of volatility. Both returns and variances are found to be negatively influenced by long durations as suggested by asymmetric information models of market micro‐structure.     

The impact of related party transactions on earnings management: some insights from the Italian context

Related party transactions have become a key issue as a result of recent financial scandals. This study examines whether firms use related party transactions for earnings management, and then, whether they try to minimize detection through the format of related party transactions disclosure. Firstly, we analyze the association between related party transactions structure (types and parties involved) and the probability of reporting small earnings increase. Related party transactions may have significant impact on, and implications for, earnings management. According to the agency theory, related party transactions are used opportunistically, while the efficient transaction hypothesis argues that related party transactions meet the economic needs of the business. We next investigate the association between the probability of reporting small earnings increases through related party transactions and disclosure quality. Disclosure quality should be studied in relation to impression management and investor attention; this approach takes account of the idea that earnings management behavior may influence the quality of disclosure as a possible way of lowering conflict of interest. In line with the agency theory, our findings show that revenue related party transactions are more likely to be used to manage earnings than other types of transaction; related party transactions with ultimate parents are associated with lower probability of reporting small earnings increases compared to operations with other related parties. Lastly, our results confirm that the decision to engage in earnings management is related to lower disclosure quality.     

QoS in the internal supply chain: the next lever of competitive advantage and organisational performance

This article presents a research that examines the relationship of quality of service (QoS) and organisational performance in a manufacturing setting. There are few empirical studies that measure QoS in the manufacturing supply chain. A model linking QoS with organisational performance through intermediate variables of satisfaction, loyalty and competitive advantage is introduced and tested in the internal supply chain of three automotive organisations. The research design for this article includes a combination of literature review, exploratory interviews with scholars and practitioners, and a survey of 156 practitioners in three automotive companies in North India. Structural equation modelling has been used for data analysis. This research comes out with four factor scale for internal service quality and six-factor scale for external service quality. The research revealed that employee-driven QoS is a source of value addition that is positively linked with the organisational performance. This study would be of interest to manufacturing industry practitioners interested in internal and external service quality improvements. Future researchers could validate this scale, and empirically test the proposed model.     

基于第一HJ距离的线性因子模型设定检验

模型设定检验是金融建模的重要环节,是减少模型风险的关键步骤.本文基于Hansen和Jagannathan[1]提出的第一HJ距离模型误设测度,以台湾市场丰富的股票和指数期权数据为基础,对8种常见的线性因子模型(包括基于金融资产价格的线性因子模型)进行模型误设检验,并探究模型设定对参数检验的影响.研究发现:在5%的显著性水平下,所有无条件信息模型均存在模型误设问题,仅FF3、LM、VanM、SkewM的条件信息模型成为可接受的正确模型;同时,是否考虑模型可能误设会影响SDF参数的检验,考虑模型可能误设能更有效地侦测因子的定价能力,而不考虑模型可能误设会高估模型SDF参数的t值绝对值,致使部分因子可能存在"伪"定价现象.     

An integrated modelling approach for raw material management in a steel mill

An integrated modelling approach combining optimisation models with simulation is proposed for coordinated raw material management at steel works throughout the whole supply chain management process. The integrated model is composed of three components: ship scheduling, yard operation simulation and material blending models. The ship scheduling model determines which brands, how much and when they should be arrived, and the problem is modelled as mixed integer linear programming. The simulation model is used to simulate the whole processes from ships’ arrivals to the retrieval of the materials through the berthing and unloading the raw materials. Finally, the raw material blending model is developed for determining the brand and quantity of raw materials to be used. The proposed integrated modelling approach for raw material management has been successfully implemented and applied at steelwork to provide shipping schedules and predict future inventory levels at stock yards. By coordinating all the activities throughout the entire raw material supply chain management process, this article proposes an integrated approach to the problem and suggests a guideline by the appropriate simplification. The quantitative nature of the optimisation model and simulation facilitates an assessment of the risk factors in the supply chain, leading to an evaluation of a wide variety of scenarios and the development of multiple contingency plans. Further research is expected to supplement the ship scheduling models with heuristics for the idiosyncratic constraints of maritime transportation.     

THE DOLLARS AND SENSE OF SIMULATION

This paper deals with the economics of computer simulation applied to problems in the operations management/industrial engineering area. First, the material in the literature dealing with the economics of simulation is summarized. However, the amount of information available on the economics of simulation is very small. A number of hypotheses are presented for this paucity of material. Since many managers operate in an environment in which costs and benefits are relevant to their decision-making process, the lack of data on the economics of simulation may be a barrier to the utilization of the technique. In an attempt to improve this situation, a framework for the collection and specification of the economics of simulation modeling projects is proposed as a method of urging management scientists to begin to collect and publish data on the economics of simulation projects.