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Article

Jan M. Smolarski, Neil Wilner and Jose G. Vega

This paper aims to examine the applicability of real options methodology with respect to developing internal transfer pricing mechanisms. A pervasive theme in existing…

Abstract

Purpose

This paper aims to examine the applicability of real options methodology with respect to developing internal transfer pricing mechanisms. A pervasive theme in existing models is their inability to handle the dynamic and volatile nature of today’s business environment, as well as their lack of objective managerial flexibility. The authors address these and other issues and develop a transfer pricing mechanism based on Black–Scholes and the binomial options pricing methodology, which is better suited in today’s dynamic business environment.

Design/methodology/approach

The authors use a conceptual approach in developing theoretical justifications and show, practically, how a transfer price can be developed using two different real options pricing models.

Findings

The authors find that real options transfer price mechanism (real options framework [ROF]) can effectively deal with many of the issues that permeate a modern organization with complex multi-dimensional operations. The authors argue that uncertainty and behavioral issues commonly associated with setting transfer prices are better handled using a transfer pricing mechanism that preserves flexibility at the business unit level, the managerial level and the firm level. The approach allows for different managerial styles in both centralized and decentralized sub-units within the same organization. The authors argue that an open multi-dimensional framework using real options is suitable under conditions of uncertainty and managerial opportunism.

Practical implications

ROF-based transfer pricing may be significant in that firms can use it as a tool to manage an organization by setting the prices centrally and at the same time allowing managers to select the transfer price that best suits their specific situation and operating conditions. This may result in a more efficient and more profitable organization.

Originality/value

The contribution of the paper is the melding of the ROF from the finance literature with the accounting problem of setting a transfer price for items lacking a competitive market price. The authors also contribute to existing research by explicitly developing a framework that values managerial flexibility, takes into account uncertainty and considers the behavioral aspects of the transfer pricing process. The authors establish the conditions under which a generic real options model is a feasible alternative in determining a transfer price.

Details

Journal of Accounting & Organizational Change, vol. 15 no. 4
Type: Research Article
ISSN: 1832-5912

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Article

Arnold Schneider and Neil Wilner

This article investigates the impact of auditing on the commission of financial reporting irregularities by managers. We also examine whether the deterrent effect of…

Abstract

This article investigates the impact of auditing on the commission of financial reporting irregularities by managers. We also examine whether the deterrent effect of auditing is affected by individual demographics. An experiment, using three case scenarios, was employed. Our findings indicated that auditing had a strong deterrent effect when the following conditions were present: material dollar amounts, irregularities involving asset overstatements, unambiguous violations of accounting principles, and low incentive for misstating income. While age, experience, and contact with auditors did not influence the deterrent effect of auditing, we found evidence that respondents with accounting and finance specializations perceived auditing as a greater deterrent than other respondents.

Details

American Journal of Business, vol. 7 no. 1
Type: Research Article
ISSN: 1935-5181

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Article

Neil A. Wilner

This paper views the outputs of the accounting information system as elements of a control system. These outputs may be of a financial accounting nature as well as a…

Abstract

This paper views the outputs of the accounting information system as elements of a control system. These outputs may be of a financial accounting nature as well as a managerial accounting nature. Rewards for management are often based on measures typically found in the annual reports. Managers have an interest in making sure these measures are favorable. This paper presents ways for management to deal with situations where what is good (bad) for the manager may be bad (good) for the company.

Details

American Journal of Business, vol. 3 no. 1
Type: Research Article
ISSN: 1935-5181

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Article

Jan Smolarski, Neil Wilner and Weifang Yang

The purpose of this paper is to examine the use of financial information and valuation methods among private equity funds in Europe and India. The authors analyze…

Abstract

Purpose

The purpose of this paper is to examine the use of financial information and valuation methods among private equity funds in Europe and India. The authors analyze differences in the choice of valuation methods and how the use of financial information differs among funds in the UK, Pan Europe and India.

Design/methodology/approach

A survey approach was utilized in collecting proprietary data from European and Indian private equity funds. The data were classified according to fund type, country grouping, size, risk profile, labor cost and industry structure and analyzed using MANOVA and ANOVA.

Findings

The results show that the use of valuation models is relatively homogeneous across countries and that the use of financial information appears to be driven to a large extent by fund type and fund focus. The use of audited financial statements appears to increase as firms mature. Significant differences were found in standard financial adjustments between the two fund types and between the country groupings. Results based on labor cost are weakly significant whereas industry structure does not appear to have an impact on how fund managers evaluate investments.

Research limitations/implications

The results indicate that fund managers adapt their decision‐making behavior according to investment type and risk. The authors argue that understanding asymmetrical and structural issues may potentially improve investment decision‐making processes. The main conclusion for researchers is that buy‐out and venture capital funds should not be combined as one asset class. Since a survey approach was used, the study is subject to the belief that fund managers do not internalize decisions well, which could reduce the effectiveness of the research design.

Originality/value

There are few studies in the areas covered by this paper due to the proprietary nature of the private equity industry. The results are important because they help in understanding how fund managers use decision aids such as financial statements and valuation techniques. A better understanding of current practices will help fund managers and fund sponsors in devising improved decision aids and processes, which ultimately may lead to fewer non‐performing investments. This is especially important in private equity since investment decisions are often irreversible and binary.

Details

Review of Accounting and Finance, vol. 10 no. 1
Type: Research Article
ISSN: 1475-7702

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Abstract

Details

Mad Muse: The Mental Illness Memoir in a Writer's Life and Work
Type: Book
ISBN: 978-1-78973-810-0

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Article

Georgios I. Zekos

Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and…

Abstract

Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way of using the law in specific circumstances, and shows the variations therein. Sums up that arbitration is much the better way to gok as it avoids delays and expenses, plus the vexation/frustration of normal litigation. Concludes that the US and Greek constitutions and common law tradition in England appear to allow involved parties to choose their own judge, who can thus be an arbitrator. Discusses e‐commerce and speculates on this for the future.

Details

Managerial Law, vol. 46 no. 2/3
Type: Research Article
ISSN: 0309-0558

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Article

Dave Florin, Barry Callen, Sean Mullen and Jeane Kropp

Understanding the context surrounding a brand's role is paramount to knowing what drives consumers to want what they want. The purpose of this paper is to highlight eight…

Abstract

Purpose

Understanding the context surrounding a brand's role is paramount to knowing what drives consumers to want what they want. The purpose of this paper is to highlight eight mega‐trends that are currently influencing the consumers' world and, in turn, how marketers deliver brand messages.

Design/methodology/approach

The integrated brand development and marketing firm, Hiebing, conducted secondary research to help define and identify the eight mega‐trends referenced in this paper. Since 1981, Hiebing has helped hundreds of clients find, design and deliver powerful communications that have increased brands' impact and profits.

Findings

Consumers drive the universe. Not brands. Not products. Not businesses. And today's consumers are more sophisticated than ever at tuning out messages that do not resonate immediately with their own desires or needs. Relevancy – the role that a particular brand plays in consumers' lives – is what it is all about. Unless your brand plays a role that consumers value, you are wasting your time.

Originality/value

This paper identifies and elaborates on eight mega‐trends that are critical for marketers to understand. Staying current with them is the first step toward creating powerful communications between your targets and a brand that will withstand the test of time.

Details

Journal of Product & Brand Management, vol. 16 no. 4
Type: Research Article
ISSN: 1061-0421

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Article

Carmen C. Moran and Neil R. Britton

Coping style has been examined across a variety of stressful encounters,but surprisingly little is known about coping in the emergency ordisaster context. Examines coping…

Abstract

Coping style has been examined across a variety of stressful encounters, but surprisingly little is known about coping in the emergency or disaster context. Examines coping strategies and impact of events in emergency workers who generally have not been exposed to major events in the course of their emergency role. The profile of scores suggests that emergency workers are problem‐focused and are less inclined to assuage problems through emotion‐focused coping, thus supporting the popular notion of emergency workers as task‐oriented and committed to action. Discusses the extent to which this profile may enhance wellbeing and prevent stress symptoms following emergency events.

Details

Disaster Prevention and Management: An International Journal, vol. 3 no. 4
Type: Research Article
ISSN: 0965-3562

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Article

Hayley Cocker, Rebecca Mardon and Kate L. Daunt

This paper aims to elucidate instances whereby celebrity endorsements by social media influencers (SMIs) embedded within online consumption communities are perceived as…

Abstract

Purpose

This paper aims to elucidate instances whereby celebrity endorsements by social media influencers (SMIs) embedded within online consumption communities are perceived as transgressive by their fellow community members. In doing so, this study provides insights into the new challenges and considerations that such community contexts present for celebrity endorsement.

Design/methodology/approach

The research team conducted a longitudinal, netnographic study of the YouTube beauty community, involving an initial phase of netnographic immersion followed by an investigative netnography that examined community members’ response to celebrity endorsements by 12 SMIs within the community.

Findings

This study identifies five recurring celebrity endorsement transgressions, each violating an established moral responsibility within the community. The paper explores how community members attribute responsibility for transgressive endorsements and identifies consequences for both the SMI and the endorsed brand.

Research limitations/implications

This study focused on a single consumption community, developing a deep understanding of the distinct moral responsibilities that shape the reception of celebrity endorsements within this context.

Practical implications

The paper presents managerial recommendations that will aid both SMIs and brands in implementing celebrity endorsements that avoid communal perceptions of transgression.

Originality/value

The analysis extends prior study on celebrity endorsement by SMIs by explaining when and why SMI endorsements are likely to be perceived as transgressive by the community and providing new insights into community member responses to transgressive SMI endorsements. It also extends wider theories of celebrity endorsement by highlighting the influence of consumption community contexts upon endorsement reception and examining consumer responses to celebrity endorsements perceived as transgressive in and of themselves.

Details

European Journal of Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0309-0566

Keywords

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