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1 – 10 of over 16000The purpose of this paper is to explore compensation for compulsorily acquired businesses in the pre-statutory value to the owner regime compared to the post-statutory cost and…
Abstract
Purpose
The purpose of this paper is to explore compensation for compulsorily acquired businesses in the pre-statutory value to the owner regime compared to the post-statutory cost and loss to the owner regime.
Design/methodology/approach
The study involved researching decisions of the NSW Land and Environment Court and appellate courts in the pre- and post-statutory regimes. It also involved the identification of value to owner compensation in pre-statutory decisions and comparison with costs and loss to owner compensation in post-statutory decisions.
Findings
The study found that the few post-statutory decisions on disturbance compensation for compulsorily acquired businesses appear inconsistent with the provisions of the statute; however, the value vs cost debate has not yet been fully tested in the courts.
Research limitations/implications
The research is limited by the number and types of cases brought before the primary court and the number and types of cases then brought before the appellate courts.
Practical implications
With recent decisions in the post-statutory regime adopting a more clinical interpretation of the Act concerning other heads of claim for disturbance, future cases before the courts may be expected to have a greater focus on the value vs cost issue for compensation claims for compulsorily acquired businesses.
Social implications
Compensation based on a clinical interpretation of cost or loss arising from the compulsory acquisition of a business in the post-statutory regime may result in inequitable compensation to the acquired party, failing the primary provision of the Act to justly compensate for the acquisition.
Originality/value
While conceptual differences between cost and value were considered and distinguished long ago in the valuation discipline in Australia and overseas, this is the first time they have emerged in the legal discipline in Australia through specific statutory wording.
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The purpose of this paper is to review the principles for valuation and proof of contractor's claims for additional site overheads arising from delays to completion of…
Abstract
Purpose
The purpose of this paper is to review the principles for valuation and proof of contractor's claims for additional site overheads arising from delays to completion of construction projects.
Design/methodology/approach
An overview of prolongation costs and established principles for recovery is provided. Aspects of recent decisions are analysed critically with respect to proof of delay claims, site overheads and claims for winter working losses. Findings are compared with the established principles.
Findings
Some statements in the judgment in Costain v. Haswell [2010] TCLR 1 with respect to requirements for proof of delay claims and for recovery of site overheads depart from established principles. Other elements of the judgment confirm existing principles. The need to distinguish between time‐ and volume‐related costs emerges as critical in valuation of delay‐related losses.
Practical implications
The need for a claimant to establish proof of delays to completion, and proof of loss, particularly in professional negligence claims, is emphasised. The consequences of failing to establish proof are noted as extending potentially to loss of the entire claim.
Originality/value
The paper will help construction practitioners, academics and lawyers understand the potentially far‐reaching impact of the principles advocated in recent case law.
Fernando Galdi, André De Moura and Robson França
This paper investigates which loan loss provision (LLP) model [International Accounting Standards39 (IAS39) based on incurred losses and Brazilian Central Bank Generally Accepted…
Abstract
Purpose
This paper investigates which loan loss provision (LLP) model [International Accounting Standards39 (IAS39) based on incurred losses and Brazilian Central Bank Generally Accepted Accounting Principles (GAAP) based on a mixed model] presents higher quality in terms of predictability, and which model is less susceptible to earnings management practices using LLP.
Design/methodology/approach
To test the difference between the explanatory power of the mixed model and incurred loss model in explaining the LLP, this paper runs a two-stage fixed-effect panel regression model to evaluate the association between LLP of each model and variables representatives of non-discretionary aspects related to the quality of the loan portfolio, business cycles and qualitative evidence indicated in each GAAP. Then, this paper tests the relationship between the errors generated in each regression and the discretion of bank managers and banks’ characteristics.
Findings
This paper finds that the mixed model results in higher R2 demonstrating that the number produced under this regime is more related to observable variables than the number produced under the incurred losses model. Further, this paper finds no evidence that there is a difference in earnings management between the two standards and this paper does not find that banks manage earnings through regulatory capital. Nevertheless, this paper finds that earnings management is higher in private than in listed banks.
Originality/value
This paper takes advantage of the unique feature of the Brazilian Central Bank regulation to investigate the impact of two different accounting standards on LLP in a perfect setting.
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Silvio Tarca and Marek Rutkowski
This study aims to render a fundamental assessment of the Basel II internal ratings-based (IRB) approach by taking readings of the Australian banking sector since the…
Abstract
Purpose
This study aims to render a fundamental assessment of the Basel II internal ratings-based (IRB) approach by taking readings of the Australian banking sector since the implementation of Basel II and comparing them with signals from macroeconomic indicators, financial statistics and external credit ratings. The IRB approach to capital adequacy for credit risk, which implements an asymptotic single risk factor (ASRF) model, plays an important role in protecting the Australian banking sector against insolvency.
Design/methodology/approach
Realisations of the single systematic risk factor, interpreted as describing the prevailing state of the Australian economy, are recovered from the ASRF model and compared with macroeconomic indicators. Similarly, estimates of distance-to-default, reflecting the capacity of the Australian banking sector to absorb credit losses, are recovered from the ASRF model and compared with financial statistics and external credit ratings. With the implementation of Basel II preceding the time when the effect of the financial crisis of 2007-2009 was most acutely felt, the authors measure the impact of the crisis on the Australian banking sector.
Findings
Measurements from the ASRF model find general agreement with signals from macroeconomic indicators, financial statistics and external credit ratings. This leads to a favourable assessment of the ASRF model for the purposes of capital allocation, performance attribution and risk monitoring. The empirical analysis used in this paper reveals that the recent crisis imparted a mild stress on the Australian banking sector.
Research limitations/implications
Given the range of economic conditions, from mild contraction to moderate expansion, experienced in Australia since the implementation of Basel II, the authors cannot attest to the validity of the model specification of the IRB approach for its intended purpose of solvency assessment.
Originality/value
Access to internal bank data collected by the prudential regulator distinguishes this paper from other empirical studies on the IRB approach and financial crisis of 2007-2009. The authors are not the first to attempt to measure the effects of the recent crisis, but they believe that they are the first to do so using regulatory data.
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Health insurance is one of the major contributors of growth of general insurance industry in India. It alone accounts for around 29% of total general insurance premium income…
Abstract
Purpose
Health insurance is one of the major contributors of growth of general insurance industry in India. It alone accounts for around 29% of total general insurance premium income earned in India. The growth of this sector is important from the perspective of overall growth of general insurance Industry. At the same time, problems in this sector are also many which are affecting its performance.
Design/methodology/approach
The paper provides an understanding on performance of health insurance sector in India. This study attempts to find out how much claims and commission and management expenses it has to incur to earn certain amount of premium. Methodology used for the study is regression analysis to establish relationship between dependent variable (Profit/Loss) and independent variable (Health Insurance Premium earned).
Findings
Findings of the study indicate that there is significant relationship between earned premium and underwriting loss. There has been increase of premium earnings which instead of increasing profit for the sector in fact has increased underwriting loss over the years. The earnings of the sector is growing at compounded annual growth rate of 27% still it is unable to earn underwriting profit.
Originality/value
This study is self-driven based on secondary data obtained from insurance regulatory and development authority site.
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Brighton Mvumi, Learnmore Tatenda Matsikira and Jackqeline Mutambara
– The purpose of this paper is to evaluate the banana industry in Zimbabwe focusing on postharvest losses along the value chain (VC).
Abstract
Purpose
The purpose of this paper is to evaluate the banana industry in Zimbabwe focusing on postharvest losses along the value chain (VC).
Design/methodology/approach
The study evaluated the banana industry in Zimbabwe focusing on postharvest losses along the VC.
Findings
Total postharvest losses for 2011-2012 were estimated to be 24-27 per cent of total production with a minimum economic loss of USD69,983/annum/firm, and a total loss of more than USD500,000/annum between the VCs analysed. The bulk of the losses occurred at farm level during handling and transportation. The major factors contributing to banana postharvest losses were: unreliable transport, poor communication and coordination between producers and processors; lack of or inefficient temperature management and poor sanitation.
Practical implications
The study identified production capacity, quality and branding as opportunities and challenges in the banana industry. Currently, there is a 40 per cent unmet local demand for bananas and hence there are no exports. If modern banana handling systems are employed and more research and development is carried out along the VC, postharvest losses can be reduced significantly, resulting in increased income and potential expansion of the industry.
Originality/value
This is the first known attempt to analyse the banana VC in southern Africa and quantify postharvest losses.
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Oluwatoyin Esther Akinbowale, Polly Mashigo and Mulatu Fekadu Zerihun
The purpose of this study is to analyse cyberfraud in the South African banking industry using a multiple regression approach and develop a predictive model for the estimation and…
Abstract
Purpose
The purpose of this study is to analyse cyberfraud in the South African banking industry using a multiple regression approach and develop a predictive model for the estimation and prediction of financial losses due to cyberfraud.
Design/methodology/approach
To mitigate the occurrence of cyberfraud, this study uses the multiple regression approach to correlate the relationship between financial loss and cyberfraud activities. The cyberfraud activities in South Africa are classified into three, namely, digital banking application, online and mobile banking fraud. Secondary data that captures the rate of cyberfraud occurrences within these three major categories with their resulting financial losses were used for the multiple regression analysis that was carried out in the Statistical Package for Social Science (SPSS, 2022 environment).
Findings
The results obtained indicate that the South African financial institutions still incur significant financial losses due to cyberfraud perpetration. The two main independent variables used to estimate the magnitude of financial loss in the South Africa’s banking industry are online (internet) banking fraud (X2) and mobile banking fraud (X3). Furthermore, a multiple regression model equation was developed for the prediction of financial loss as a function of the two independent variables (X2 and X3).
Practical implications
This study adds to the literature on cyberfraud mitigation. The findings may promote the combat against cyberfraud in the South Africa’s financial institutions. It may also assist South Africa’s financial institutions to predict the financial loss that financial institutions can incur over time. It is recommended that South Africa’s financial institutions pay attention to these two key variables and mitigate any associated risks as they are crucial in determining their profitability.
Originality/value
Existing literature indicated significant financial losses to cyberfraud perpetration without establishing any relationship between the magnitude of losses incurred and the prevalent forms of cyberfraud. Thus, the novelty of this study lies in the analysis of cyberfraud in the South African banking industry using a multiple regression approach to link financial losses to the perpetration of the prevalent forms of cyberfraud. It also develops a predictive model for the estimation and projection of financial losses.
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André de Korvin and Margaret F. Shipley
Determining the proper sample size such that quality is assured while financial losses are not unnecessarily incurred is critical to an effective quality program. The main purpose…
Abstract
Determining the proper sample size such that quality is assured while financial losses are not unnecessarily incurred is critical to an effective quality program. The main purpose of the present work is to design a fuzzy controller to adjust sample sizes according to potential fuzzy loss penalties. A set of fuzzy rules is given where, depending on the antecedents, the sample size may be decreased, moderately modified, or increased. At any given moment the proportion of defects in the sample determines the firing strength of the rules suggesting an appropriate sample size. These rules are then modified to include an analysis of the decision maker’s belief that in a particular situation an inappropriate rule is being considered such that an expected loss would be incurred in meeting or falling short of defined quality goals.
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J. David Cummins and Xiaoying Xie
The purpose of this paper is to determine the market‐value relevance of frontier efficiency scores and to test hypotheses from corporate control and production theory by analyzing…
Abstract
Purpose
The purpose of this paper is to determine the market‐value relevance of frontier efficiency scores and to test hypotheses from corporate control and production theory by analyzing the market response to US property–liability (P–L) insurer acquisitions and divestitures.
Design/methodology/approach
Cost and revenue efficiencies are estimated based on accounting data for US P–L insurers using data envelopment analysis. The market‐value response to acquisitions and divestitures is estimated using a standard market model event study. Regression analysis is used to measure the relationship between abnormal returns (dependent variable) and efficiency (independent variable), along with a set of control variables.
Findings
The results show that acquirers, targets and divesting firms all have significant positive abnormal returns around announcement dates. We also find that efficient acquirers and targets have higher cumulative abnormal returns (CAR) but inefficient divesting firms have higher CARs.
Research limitations/implications
The findings are consistent with insurance acquisitions and divestitures being driven primarily by value‐maximizing motivations, consistent with corporate control and production theory.
Practical implications
Frontier efficiency scores based on accounting data provide value‐relevant information for insurance managers.
Originality/value
This is one of only a few papers that relate frontier efficiency to market values and is the first paper to do this for the insurance industry. It is also one of only two existing papers that analyze the value relevance of efficiency scores in the context of mergers and acquisitions.
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