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Book part
Publication date: 18 July 2016

Kenneth D. Lawrence, Gary Kleinman and Sheila M. Lawrence

The research is directed toward the prediction of operating income within the MetLife Insurance Company. The operating income of the firm is the amount of profit realized from a…

Abstract

The research is directed toward the prediction of operating income within the MetLife Insurance Company. The operating income of the firm is the amount of profit realized from a firm’s own operation, as opposed to net income. The econometric model is based on 10 years of quarterly data (2004–2014). The explanatory variables used in this modeling effort are (1) stock price, (2) long-term borrowing, (3) capital surplus, (4) free cash flow, (5), S&P average, (6) GDP, and (7) CPI.

Details

Advances in Business and Management Forecasting
Type: Book
ISBN: 978-1-78635-534-8

Keywords

Article
Publication date: 1 April 1984

LINCOLN NORTH

In contrast to rents which are prescribed by contract to remain fixed or constant during the term of a lease, the expression variable rents simply implies that the rent to be paid…

Abstract

In contrast to rents which are prescribed by contract to remain fixed or constant during the term of a lease, the expression variable rents simply implies that the rent to be paid during the tenure of occupancy will be subject to change with the passage of time.

Details

Journal of Valuation, vol. 2 no. 4
Type: Research Article
ISSN: 0263-7480

Article
Publication date: 1 January 1984

PETER KORPACZ and MARK ROTH

The marketplace has never been as dynamic as it is today. In real estate, many factors are affecting the validity and usefulness of traditional valuation techniques. Rent levels…

Abstract

The marketplace has never been as dynamic as it is today. In real estate, many factors are affecting the validity and usefulness of traditional valuation techniques. Rent levels in many markets have risen so rapidly in the last two years that a wide margin exists between current economic rents and contract rents — resulting in a greater market differential. As leases expire and space is released at much higher rent levels, opportunities occur for rapidly increasing cash flows. (The occurrence of lease expirations and subsequent releasing of the space is commonly referred to as ‘lease rollover’.)

Details

Journal of Valuation, vol. 2 no. 1
Type: Research Article
ISSN: 0263-7480

Article
Publication date: 30 October 2009

Clare Roberts and Yue Wang

The purpose of this paper is to examine the effects of institutional factors and the European Union (EU) accounting harmonization on the value‐relevance and comparability of dirty…

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Abstract

Purpose

The purpose of this paper is to examine the effects of institutional factors and the European Union (EU) accounting harmonization on the value‐relevance and comparability of dirty surplus accounting flows (DSFs) in the member countries throughout the period 1993 to 2002.

Design/methodology/approach

The returns‐earnings models and fixed‐effect operating income growth models are used to examine the differences in the incremental and relative relevance of DSFs between countries which have a piecemeal system of regulation with significant input from the profession and/or market participants, and the code law countries with the government being the most important institution with regard to accounting regulation. Moreover, the relevance of DSFs in the three sub‐periods is compared, each reflecting quite distinct attitudes in the EU towards international accounting harmonization.

Findings

DSFs are incrementally relevant in Denmark, Finland, Ireland, Sweden and the UK, where equity market plays an important role in the country's financing system; and in comparison to comprehensive income, reported income is a dominant measure of performance in most European countries, with the exception of the five afore‐mentioned countries. There is also evidence that cross country differences in the value‐relevance and predictability of DSFs decrease in the later years of this sample period.

Research limitations/implications

Future research focusing upon the specific accounting changes made by companies in the EU is needed for a better understanding of the relative importance of stock market integration and standard setting changes in explaining the characteristics of DSFs.

Practical implications

The results indicate that the convergence in the reporting of DSFs over time is driven by global capital market integration, and more importantly, the accounting harmonization activities carried out via self‐regulation with significant input from the profession and/or market participants at national level.

Originality/value

The paper seeks to explore, firstly, the extent to which differences in the reporting of DSFs across the EU may be explained by institutional differences. Secondly, it explores whether or not differences across the countries have decreased in three phases of the EU harmonization process.

Details

Review of Accounting and Finance, vol. 8 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

Case study
Publication date: 20 January 2017

Marc L. Lipson and Rick Green

Monsanto is facing an uncertain near-term financial outlook, and this case challenges students to generate an operating forecast (income statement and balance sheet operating

Abstract

Monsanto is facing an uncertain near-term financial outlook, and this case challenges students to generate an operating forecast (income statement and balance sheet operating accounts). The case naturally lends itself to sensitivity analysis related to sales growth assumptions. Suitable for MBA and undergraduate learners, it covers the basics of forecasting without introducing the complexities associated with financing. A teaching note is available.

Details

Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

Keywords

Article
Publication date: 3 April 2019

David A. DeBoeuf

The purpose of this paper is to outline the problems encountered by a student-managed investment program (SMIP) when the pool of qualified finance majors is limited in number…

Abstract

Purpose

The purpose of this paper is to outline the problems encountered by a student-managed investment program (SMIP) when the pool of qualified finance majors is limited in number. Restructuring the program to a single-semester course and opening the class to motivated/intelligent non-finance majors increased the number of applicants, but resulted in alternative difficulties, particularly time constraints and inadequate student preparedness. A prerequisite exam and regimented classroom structure were the solutions.

Design/methodology/approach

The paper discusses the problems encountered and solutions devised to address the early year difficulties experienced by a newly developed SMIP at a relatively small university. The core of the paper chronicles the classroom approach to solving the main problem of a single-semester portfolio management course, the handling of an investment learning curve in a short period of time.

Findings

Though empirically limited due to the program’s infancy, portfolio performance has been encouraging and student feedback exceptional. Regarding the former, stocks purchased by the fund have created greater wealth in total than that of equal dollar investments in an S&P500 index fund.

Practical implications

Universities interested in running a student-managed fund should feel secure in a one-semester approach, regardless of talent pool size, as measured by the number of motivated, intelligent finance majors.

Originality/value

Aside from the uniqueness of requiring a mastery of entrance exam investing materials prior to the first class, this paper’s outline of core portfolio management activities includes several strategies and methods meant to streamline the process within a groupthink design.

Details

Managerial Finance, vol. 46 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 14 December 2021

Matthew Moorhead, Lynne Armitage and Martin Skitmore

The purpose is to examine the risk management processes and methods used in determining project feasibility in the early stages of the property development process by…

Abstract

Purpose

The purpose is to examine the risk management processes and methods used in determining project feasibility in the early stages of the property development process by Australia/New Zealand property developers, including Monte Carlo simulation, Bayesian models and real option theory embedded in long-term property development and investment decision-making as instruments for providing flexibility and managing risk, uncertainty and change.

Design/methodology/approach

A questionnaire survey of 225 Australian and New Zealand trader developers, development managers, investors, valuers, fund managers and government/charities/other relating to Australia/New Zealand property development companies' decision-making processes in the early stages of the development process prior to site acquisition or project commencement – the methods used and confidence in their organisations' ability to both identify and manage the risks involved.

Findings

Few of the organisations sampled use sophisticated methods; those organisations that are more likely to use such methods for conducting risk analysis include development organisations that undertake large projects, use more risk analysis methods and have more layers in their project approval process. Decision-makers have a high level of confidence in their organisation's ability to both identify and manage the risks involved, although this is not mirrored in their actual risk management processes. Although the majority of property developers have a risk management plan, less than half have implemented it, and a third need improvement.

Practical implications

Property development organisations should incorporate more modern and sophisticated models of risk analysis to determine the uncertainty of, and risk in, a change of input variables in their financial viability appraisals. Practical application includes using such multiple techniques as what-if scenarios and probability analysis into feasibility processes and utilise these specific techniques in the pre-acquisition stages of the property development process and, specifically, in the site acquisition process to support decision-making, including a live risk register and catalogue of risks, including identification of and plans for mitigation of project risks, as a form of risk management.

Originality/value

First study to examine the extent of the decision-making methods used by property developers in the pre-acquisition stage of the development process.

Details

Journal of Property Investment & Finance, vol. 40 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Case study
Publication date: 27 February 2019

Naman Desai, Joshy Jacob and Savan Godiawala

The case examines the financial and operational causes of business failure associated with Setco Automotive Ltd. an auto-clutch manufacturing company located in India and then…

Abstract

The case examines the financial and operational causes of business failure associated with Setco Automotive Ltd. an auto-clutch manufacturing company located in India and then proceeds to identify the key turn around factors which eventually led to Setco becoming the largest producer of clutches for medium and heavy vehicles in India. The case allows the participants to understand and evaluate the financial impact of turn around factors on the company's profitability and survivability and in also determining the optimal capital structure for a struggling company.

Details

Indian Institute of Management Ahmedabad, vol. no.
Type: Case Study
ISSN: 2633-3260
Published by: Indian Institute of Management Ahmedabad

Keywords

Article
Publication date: 19 September 2023

Pamela Fae Kent, Richard Kent and Michael Killey

This study aims to provide insights into US and Australian analysts' views regarding the relative importance of disclosing the direct method (DM) or indirect method (IM) statement…

Abstract

Purpose

This study aims to provide insights into US and Australian analysts' views regarding the relative importance of disclosing the direct method (DM) or indirect method (IM) statement of cash flows and forecasting firm performance.

Design/methodology/approach

Evidence is collected from responses to 104 surveys and 52 interviews completed by US and Australian analysts from 2017 to 2022. The survey and interview questions are developed with reference to the literature.

Findings

US and Australian analysts believe that the DM format provides incremental benefits compared to the IM for (1) confirming the reliability of earnings; (2) improving earnings confidence; (3) more accurate ex ante forecasts of operating cash flow and earnings; and (4) identifying opportunistic accruals manipulation. Analysts view that DM disclosure can lower firm-level cost of equity, although US interviewees more uniformly expect lower costs of equity under DM disclosure when firms yield low earnings quality. DM disclosure is also more important during unstable economic periods, as proxied by COVID-19.

Originality/value

Limited research currently exists regarding disclosure of the DM or IM and its impact on analysts' forecasting accuracy, earnings quality, economic uncertainty and cost of equity. Previous research has relied on archival research to examine differences between the DM and IM methods and are limited by data availability. Our findings are particularly relevant to the US market with few US firms reporting the DM format.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 19 November 2019

Lisa Hinson, Jennifer Wu Tucker and Diana Weng

The rule change for segment reporting in 1998 has arguably made segment reporting more relevant through the adoption of the management approach. Meanwhile, the management approach…

Abstract

The rule change for segment reporting in 1998 has arguably made segment reporting more relevant through the adoption of the management approach. Meanwhile, the management approach has resulted in a decrease in the comparability of segment income. We introduce firmspecific measures of changes in relevance and comparability due to the rule change. Our treatment firms experienced an increase in the relevance of segment reporting but a large decrease in the comparability of segment income; our benchmark firms barely experienced any changes in relevance and comparability. We examine earnings forecasts before vs. after the rule change issued by financial analysts—a major user group of segment reporting. Relative to benchmark firms, treatment firms’ analyst forecast error reductions around the segment disclosure event are not significantly different after the rule change than before the rule change, but treatment firms’ forecast dispersion reductions around the segment disclosure event are significantly larger after the rule change than before the rule change. These results suggest that despite the decrease in comparability, the new segment reporting rule has increased the decision usefulness of segment information by decreasing disagreement among analysts.

Details

Journal of Accounting Literature, vol. 43 no. 1
Type: Research Article
ISSN: 0737-4607

Keywords

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