In addition to physical assets, specific transactions may also involve investments into human resources, e.g. professional training. Such transactions bring benefits in case of long-term and stable buyer-seller relations . Agreement parties can considerably reduce communication costs and establish mutual trust by using relationship specificity to enable regular transactions. Thus, relationship-related specificity places an emphasis on trust and mutual adaptability . Firms often integrate into industry clusters in order to reduce transaction costs. Site specificity develops when firms concentrate in one location and share equipment, technology, and human resources for the sake of cost reduction . After applying physical, human, relationship, and site asset specificity to operations, firms must return to solving the issues regarding marketing channel expansion and profit earning. This requires the addition of specific access specificity into operations. Profits can be effectively gained after all types of assets are specified. Normally, much competition arises during transactions. However, bilateral monopolies can develop between buyers and sellers who use specified transactions due to a fixed structure of contract provisions regarding transaction costs and asset transfers. When investing equipment and financial resources into the disposal of a single source of waste, industrial waste management organizations cannot transfer the costs for equipment (physical), site, and human assets to the disposal of another waste source because these assets are fixed. For this reason, cleaning and disposal enterprises use highly specified assets.
13 Read more
EJBE 2008, 1(2) Page | 11 Relational transacting — refers to intermediate trust-based form of cooperative arrangement. This form is governed by implicit social norms of inter-organizational behavior and involves relatively less complex and less formal contractual arrangements between business parties (Webster, 1992). In this study two dimensions of relational transacting are identified: percentage of manufacturer's sales that are prepaid; and the level of completeness of the contract (in number of pages). Higher level of relational transacting is associated with lower levels of percentage of sales prepayment, and less contract completeness. For the sake of current research the following variables are considered as main determinants of relational transacting: asset specificity, uncertainty, network and extended trust. According to empirical findings in TCE literature, asset specificity and uncertainty create pressure toward adopting of more specified and lengthy contracts (Crocker, 1993; Joscow, 1987). A number of trust-based studies revealed a significant positive effect of trust on stability of cooperative relationship (Moorman, 1993; Morgan, 1994), effectiveness of distributor and manufacturer firms working partnerships (Anderson, 1990), effectiveness of selling partner relationships (Smith, 1997). In these and other studies trust has been identified as a condition for cooperation and prerequisite for successful relational contracting, which, in turn, requires lower levels of contract formalization and completeness, and thereby reduces transaction costs (Johnson, 1997; McMillan, 1999; Raiser, 2004). Hence: H6a: The greater the degree of specificity of knowledge and capabilities related to performing of selling function by a particular manufacturer company, the higher the percentage of manufacturer's sales that is prepaid.
32 Read more
Building on SET insights, any form of ‘give-and-take’ interaction constitutes a social exchange process. Accordingly, we contend that bilateral asset specificity consists of an underlying social exchange process between the parties, a process that affirms the opponent’s goodwill, strengthens the reciprocity beliefs, and indeed elevates trust. The reciprocity is also constitutive. It facilitates an expectation that a good-deed engenders the return of the good-deed (Blau 1964; Molm et al. 2007). In the mutual exchange of positive behavior, reciprocity emerges in two components (Gouldner 1960; Hoppner and Griffith 2011; Hoppner et al. 2015; Swärd 2016). In the one, the concept of reciprocity is construed on exchanges of latent goodwill intentions (partner’s actions in the dyad are more mutual-interest driven than self-interest driven). In the other, reciprocity is built on the equivalence of contributions (the level of investment in comparison to that of the partner). The present investigation contributes to the literature by identifying goodwill reciprocity and equivalence reciprocity within bilateral asset specificity to extend the field’s understandings.
121 Read more
Early contributions in the RBV were focused on trying to understand competitive advantage. They did not set out to explain the nature of the firm. 9 For Pitelis and Wahl (1998), the Penrosean version of the RBV, however, could be interpreted as a theory of the nature of the firm too. The superiority of firms in terms of knowledge creation, innovation, and knowledge transfer (Teece, 1980, 1982) could be seen as an embellishment to Coase’s, Arrow’s, and Williamson’s transactions cost/market failure framework. Subsequent literature, summarized in Mahoney (2005), has used the two theories as partly complementary, partly incompatible. Issues of potential incompatibility revolved around the question of “opportunism” and “asset specificity.” Such issues notwithstanding, the alleged production-costs-related advantages of firms have been acknowledged as complementary to his own by Coase himself. In a letter to one of the authors about Penrose’s views Coase observed that,
37 Read more
make certain modifications to meet its overseas partner’s specifications given the unique characteristics of the target market consumers. These investments in specialized assets dedicated to exchanges in a particular foreign market involve serious resource commitment and may create both a source of competitive advantage and a barrier to the exit of the relationship, as the transaction-specific investments may have no alternative usage outside that export exchange. Such investments have the effect of reducing a large-numbers bargaining situation to a small-numbers situation. Thus the level of asset specificity represents the potentiality of market failure and high transaction costs under the assumption of opportunism (Brouthers and Hennart, 2007).
46 Read more
opportunistic behaviors in a joint venture will enable the MNE to buy out the local partner’s stake and convert the JV to a WOS (Puck et al., 2009). Fixed assets ratio then serves as an indicator of asset specificity, that is specific investments in terms of “sophisticated machinery”, reflecting in the JV’s amount of fixed assets- Chang et al. (2013). Firm age is related to the time length of learning from each other by both the MNE and the local partner (Hennart, 1991). Steensma et al. (2008) find that “the acquisition of knowledge” from the MNE partner increases the likelihood that the local partner takes over the whole JV from its MNE partner at a later stage. Joint ventures could also be seen as real options that provide the parents both the put option (divest) or call option (acquire) later (Kogut, 1991). ROA, leverage ratio, and “export platform”, therefore, act as a proxy for the values of these “real options” in later periods when
190 Read more
Elaborating on the aforementioned stream of research, this study‟s technological contingency perspective relies upon four factors: product innovation, asset specificity, volume uncertainty and technological uncertainty. The degree of product innovation is an internal technological parameter that captures the flow of ongoing innovative activity within the firm. Asset specificity complements the first parameter and captures a firm‟s stock of internalized technology and specialized assets in terms of specialized labor, manufacturing equipment and production location. From an external perspective, volume and technology uncertainty represent the volatility of an industry, which is inherently related to the level of innovative behavior at the level of suppliers (Eisenhardt, 1989). Together these four factors are used to capture the technological situation in which international outsourcing is developing. In addition to these technological parameters, the integration of the outsourcing function in the supply chain of the firm is focused upon. The rationale for including this variable is that a high degree of integration is a prerequisite for the strategic role of the outsourcing function in a firm that builds and competes on the basis of its (internalized) technological capabilities (Narasimhan and Carter, 1990; Kotabe, 1992). In the remainder of this section, the relationship between each of these contingency factors and the degree of international outsourcing is developed and translated into specific hypotheses.
36 Read more
This study aimed at exploring how formal contractual agreements are predicted by Transaction Cost Analysis (TCA) theory using firms from emerging markets. The setting of this study was Tanzania. Dependent variable was formal contractual agreement, while performance ambiguity and buyer asset specificity were used as key predictor variables. The study was conducted through surveying, which included small, large and medium enterprises. N = 150 firms involved and all of them were engaging in to business-business relations (buyer- seller relations). The response rate was about 65%. Data analysis used ordinary least square regression analysis. This study found out that asset specificity still had strong determination on formal contractual agreement. Performance ambiguity itself found not to have significant positive effect on formal contractual agreement but its effect was dependent on asset specificity i.e. the interaction between asset specificity and performance ambiguity influence positively on formal contractual agreement. These findings do not contradict with other empirical studies from developed economies. This suggests the possibility for extending TCA theoretical predictions to firms in emerging markets, especially at this time when there is growing need for outsourcing in these markets. Again this has to take into account other variables like nature of firm, institutional and cultural differences. Such variables have not been used in this exploratory study.
(2016) examined the profitability of 39 banks in Lebanon for the year 2003-2014. In their study returns on average assets was used as profitability indicator. The findings of the study revealed that capital adequacy ratio, interest rate spread, cost to income ratio and non-interest income to total asset ratio had significant effect on the profitability of the selected banks.
The desire to retain a building or community space because of its symbolic value proved to be an incredibly powerful motivator for community ownership. However this neither guarantees the financial viability of that asset, nor that the asset will create community benefits. This demands effective financial planning, a talent for generating income and reducing costs, and a focus on what communities want and need. Despite this, local attachments to an asset were seen to be an important contributor to financial health. In some instances community ownership had made those assets more viable than they were in private or public hands. Community ownership not only helped generate funds locally to acquire and develop those assets, but also fostered a desire locally to use those assets more than previously e.g. the Peterborough Arms. Hence practitioners and those supporting the sector need to assess whether the symbolic value attached to an asset is blinding groups to likely financial challenges, or whether it could be a key enabler in achieving financial sustainability.
49 Read more
Apart from terminology, both sets of indicators, NAPPMI and FPS/Audit Scotland indicators, are for all practical purposes the same. The only difference is how the indicators are described. For instance FPS/Audit Scotland indicators have environmental and accessibility grouped under Sustainability while NAPPMI indicators show these separately. Similarly NAPPMI show property condition separately from Time and Cost. On the other hand, FPS/Audit Scotland indicators group these under Stock. For the purposes of this study both the NAPPMI indicators and those by FPS/Audit Scotland measures along with those others suggested by literature were distilled to come up with numerical measures. The adopted numerical indicators included maintenance, operating cost, sufficiency, suitability, and accessibility. Numerical indicators, however, only deal with asset performance outcomes and not asset management processes nor asset management capability shortfalls. As stated by Audit Commission for Scotland (1999), data benchmarking is useful in comparing performance with other local authorities. It can be particularly helpful as a diagnostic tool to highlight areas where the organisation appears to do better or worse than others. Data benchmarks are just the start of benchmarking for performance improvement. While the data will help to identify performance gaps, they do not in themselves help identify the causes of differences in performance or indicate how to improve performance.
434 Read more
Asset-Liability Management gewinnt in der deutschen Versicherungswirtschaft zunehmend an Bedeutung. Dies ist zum einen den Entwicklungen auf den Kapitalmärken in den vergan- genen Jahren geschuldet, die es Versicherern erschweren, gegebene Zinsgarantien zu erwirt- schaften. Zum anderen erwachsen aus dem sich maßgeblich verändernden Regulierungs- rahmen neue Anforderungen für das ALM. Solvency II wird einen Paradigmenwechsel zu einer vorwiegend ökonomischen Bertachtungsweise der Versicherungsbilanzen, insbesondere der Passiva erfordern. Herkömmliche ALM-Instrumente werden diesen neuen Anforderungen selten gerecht, weil sie die Positionen auf beiden Bilanzseiten unter risikotheoretischen As- pekten nicht simultan optimieren. In diesem Artikel wird integrierter Ansatz zur Optimierung der Bilanzstruktur in Lebensversicherungsunternehmen beschrieben, der sich der Markowitz- schen Portfolio Selection bedient. Dabei werden die neuen aufsichtsrechtlichen Erfordernisse mit der modernen Kapitalmarkttheorie verbunden und so ein Instrument zu einer integrierten, strategischen Steuerung der Kapitalanlagepolitik von Versicherungsunternehmen geschaffen.
32 Read more
stronger the Internal Control Information Quality of Local Government Asset Report will be better. Internal Control is a mechanism executed by the executive (government) to ensure the implementation of management systems and policies so that organizational goals are achieved. The existence of a significant positive correlation between internal control with information quality in line with research of Iskandar and Setiyawati (2015); Susilawati and Riana (2014); Suwanda (2015) and Kasim, (2015) The results of this study also support the research of Suyono and Hariyanto (2012: 1243) which resulted in "the rationalization of this finding that the internal control can provide assurance in the reliability of financial reporting, efficient and effective operation, and compliance with rules and regulations ". Empirical evidence is also in line with Nuryanto and Nunuy (2013) which proves that internal control has a positive and significant impact on the quality of financial statements. This condition shows the stronger the internal control that is built, the higher Information Quality of Local Government Asset Report will be.
unit increase in, Total Debt to total Asset (TDTA), will lead Return on Equity (ROE), to increase by 2.749 units. Holding other variables constant, one unit increase in Total Debt to total Equity (TDTQ) will lead Return on Equity (ROE), to decrease by 0.018 units. Holding other variables constant, one unit increase in Long Term Debt to Asset (LDTA), will lead Return on Equity (ROE), to decrease by 2.693 units. The Probability of all Variables shows the Significance of Coefficients with the R Square. The lesser the Probability the better it is. R Square is 29.8% means the Data is by some means explaining the Model but not fairly well. AIC and BIC is close to each other. However, we can afford 5% Difference. Durbin Watson is close to 2.00 in this case.
Sunshine Coast Council recently revised the Stormwater Core Asset Management Plan (AMP). The plan detailed the following Stormwater infrastructure asset classes listed below in Table 2.1. The written down value (WDV) is derived from age-based predictions, and does not necessarily reflect the current structural condition. This is evidenced through current CCTV inspections, which have shown more rapid deterioration than expected. The State of the Assets Report (2015) considers stormwater assets to be in a satisfactory and serviceable condition and on average $6 million per year of renewal capital expenditure is required to sustain current levels of service (LOS). Table 1.1 displays the breakdown of overall stormwater asset condition into three separate classes – good, fair and poor.
100 Read more
Cryptocurrencies are virtual currencies employed in blockchain transactions. They are particularly worthy of theoretical examination, given the limited academic literature on the subject. This paper constructs valuation models of bitcoin and altcoins, both as single investments and components of mut- liple-asset portfolios. As single investments, cryptocurrencies are valued at the confluence of Legendre utility functions, with Esscher transformed Geo- metric Levy pricing processes. As part of portfolios, cryptocurrencies are contained in traditional Markowitz portfolios which are varied by increasing the proportion of the riskless asset, shorting the risky asset, or adding cur- rency options. Theoretical formulations show that Markowitz models com- bined with bitcoin, located on the Capital Market Line (which we term CML portfolios), have low returns, mainly due to the presence of the riskless asset. Such portfolios are appropriately suited to the investment goals of risk-averse traders, while overlooking the preferences of risk-takers. To satisfy less risk- averse investors, we propose a high-return portfolio with 9 asset choices, con- sisting of risky assets, cryptocurrencies, US dollars, soybean futures, Treasury bond futures, oil futures, currency options on the US dollar, currency options on the Mexican peso, and technology, or biotechnology stocks. Laplace trans- forms are employed to suppress volatility, skewness, or kurtosis of returns, which empirical studies have found to contribute to tail risk contained in out- liers in fat-tailed distributions.
21 Read more
Unlike the traditional banking model, banking model such as securitization and derivatives considered by banks as a basic tool to reduce capital requirement and improve revenue, but as a consequence they had negative repercussions on lending standards and quality of loans which indirectly led to weaken financial system (Bruno and Bedendo, 2013). Though credit enhancement has a positive effect in securitization, the risk associated with securitization and credit enhancement rise when the bank poorly performs securitization and became the sources of risk for securitizing bank (Mandel et al., 2012). The increment of asset quality deterioration made securitization to become a catalyst for financial crises as a result of which investor became more risk averse and reluctant to incur asset back securities. So securitization does not resist changeable market regulation (Kozak and Teplova, 2012). However, AIRCABS banks administers investor’s loan funding to entrepreneur and the market regulation did affect the fund provider and entrepreneurs. Rather it gave an opportunity for investors and entrepreneurs to create their own loan market having the bank as an agent for fund provider in order to collect interest rate commission from ILF credit price.
21 Read more
Siregar (2004) states that asset management itself can be divided into five stages of work, the first is inventory. Asset inventory consists of two aspects, namely physical and juridical / legal inventory. Physical aspects consist of form, area, location, volume / number, type of address and others. Juridical / legal aspects are mastery status, legal issues that are owned, the deadline for mastery and so on. The work process carried out is data collection, codification / labeling of grouping and bookkeeping / administration according to the objectives of asset management. Further explained by Mardiasmo (2004) that local governments need to know the number and value of regional wealth they have, both those currently controlled and those that are still in the form of potential that have not been mastered or utilized. For this reason, regional governments need to identify and inventory the value and potential of regional assets. Identification and inventory activities are intended to obtain accurate, complete and up-to-date information on regional wealth that is owned or controlled by the regional government.
Cheng and Lin  studied timing issue unlike the existing studies on management motivation behind asset revaluation. They found that revaluers had high share return and industry leverage two years before the revaluation. These findings indicate that UK companies delay the recognition of increased asset values until this information has been confirmed by their superior market performance. They also found that that upward fixed asset revaluation decisions were used to reduce contracting costs, political costs and information asymmetry. The motive to reduce political cost reduction is also supported by the research of . Their findings mean that larger firms are found to be more likely to revalue their assets in order to mitigate political costs. Iatardis and Kilirgiotis  in their study exposed that firm size was positively related to fixed asset revaluation which is identical to the finding of Seng and Su . The study found some opposite view that firms with foreign operations, with low fixed assets, and with high debt capital needs are more likely to perform fixed asset revaluations. The study also shows that fixed asset revaluation is negatively related to earnings management.
The purpose of this study is to empirically examine the adoption of e-supply chain integration by electrical and electronic industry suppliers. This study has integrated both the transaction cost and resource dependence models in understanding the influence of buyer-seller relationships on e-supply chain integration. Hypotheses were developed based on the proposed model. Data were collected from 122 electrical and electronic suppliers located in Malaysia. The data was examined using multiple regression analysis. The results showed that Asset Specificity, Product Technological Uncertainty, Transaction frequency, Proportion of sales to e-supply chain integration promoter, and number of customers are able to explain suppliers’ decisions to adopt e-supply chain integrations with their buyers. Buyers that would like to improve the adoptions of e-supply chain integration will be able to formulate and plan strategies from the buyer-seller relationships perspectives.
14 Read more