Faculty of Commerce - Papers (Archive)

An evaluation of the usefulness of cash flow ratios to predict financial distress

L. Jooste — Sun, 14 Apr 2013 16:37:02 PDT

Purpose: With the introduction of the cash flow statement it became an integral part of financial reporting. A need arose to develop ratios for the effective evaluation of cash flow information. This article investigates cash flow ratios suggested by various researchers and suggests a list of ratios with the potential to predict financial failure. Design: The cash flow ratios suggested by researchers, from as early as 1966, are investigated and eight cash flow ratios selected for inclusion in an analysis to predict financial failure. Ten failed entities are selected for a cash flow evaluation by means of the selected ratios for five years prior to failure. For a comparison, non-failed entities, in similar sectors are selected and also evaluated by means of the cash flow ratios. The mean values of each ratio, for each year prior to failure, were then calculated and the means of the failed entities were compared to the non-failed entities. Findings: The comparison revealed that cash flow ratios have predictive value with the cash flow to total debt identified as the best indicator of failure. It was also determined that although failed entities have lower cash flows than non-failed entities, they also had smaller reserves of liquid assets. Furthermore, they have less capacity to meet debt obligations and they tend to incur more debt. The ratios of the failed entities were unstable and fluctuated from one year to the next. Finally, bankruptcy could be predicted three years prior to financial failure. Implications: Income statement and balance sheet ratios are not enough to measure liquidity. An entity can have positive liquidity ratios and increasing profits, yet have serious cash flow problems. Ratios developed from the cash flow statement should supplement traditional accrual-based ratios to provide additional information on the financial strengths and weaknesses of an entity.

Reframing public relations: new directions for theory and practice

Shirley R. Leitch — Sun, 03 Mar 2013 18:54:43 PST

In this article we deconstruct the central concepts of public relations theory: 'publics', 'relations', and 'organisations'. In offering a revised version of these concepts as a framework within which to reconstruct theory, we argue that the most seriously inadequate and undertheorised of these concepts is 'publics'. As Moffitt (1994) and Karlberg (1996) contend, the organisational perspective has tended to overwhelm and marginalise 'publics' within public relations theory. Thus the dominant focus on 'relations' has been conceptualised in the absence of a developed concept of 'publics'. As a result, public relations theory has been unable to come to terms with the power differentials between discourse participants.

A unified open systems model for explaining organisational change

Doy Sundarasaradula — Sun, 03 Mar 2013 17:20:58 PST

This paper presents an approach to developing a unified conceptual model to describe and explain change in organisations, viewed as complex systems. The authors propose a model that brings together the traditional open systems model (based on principles of homeostasis, steady state, and cybernetics) and the dissipative systems model (based on thermodynamic non-equilibrium principles) to explain distinctively different phases of change. Gradual and incremental change can be explained by using the traditional open systems model, whereas dramatic and discontinuous change can be explained by the adoption of the dissipative systems model. These two phases of change occur naturally, depending on the nature and pattern of external and internal disturbances. Since the implementation of any information system involves some degree of organisational change, it would be valuable to the IS community to more clearly understand organisational change processes, thereby increasing the possibility of success.

Market risk in demutualised self-listed stock exchanges: an international analysis of selected time-varying betas

Andrew C. Worthington — Tue, 19 Feb 2013 22:11:03 PST

Market risk in demutualised self-listed stock exchanges: an international analysis of selected time-varying betas

Andrew C. Worthington — Tue, 19 Feb 2013 22:11:03 PST

Personal bank account access and awareness: An analysis of the technological and informational constraints of Australian consumers

Andrew C. Worthington — Tue, 19 Feb 2013 22:11:02 PST

The spread of ICT innovation in accounting education

Sam H. Jebeile — Sun, 20 Jan 2013 19:20:24 PST

This paper conveys the findings of a study conducted to evaluate the initiation of an interactive online computer-assisted learning module, called WEBLEARN, in an undergraduate introductory accounting course at an Australian university. The purpose was to aid students in the preparation of cash flow statements, a topic that from the student perspective is usually considered fairly difficult. Following the pilot of the module, student responses were collected via questionnaire in order to evaluate their perceptions regarding the WEBLEARN module. Diffusion of innovations theory was utilized as a framework for assessing student responses and to guide further development of modules in other topics within the accounting unit. The results proved to be significant in relation to all four independent variables: relative advantage, compatibility, ease of use, and result demonstrability. The combination of quantitative and qualitative findings indicates that the majority of students formed favourable perceptions regarding the relative advantage, compatibility, and ease of using the module, which further translated into positive intentions regarding prospective use of the module as a learning resource.

Application of the task-technology fit model to structure and evaluate the adoption of E-books by academics

John D'Ambra — Sun, 20 Jan 2013 17:35:21 PST

Increasingly, e-books are becoming alternatives to print books in academic libraries, thus providing opportunities to assess how well the use of e-books meets the requirements of academics. This study uses the task-technology fit (TTF) model to explore the interrelationships of e-books, the affordances offered by smart readers, the information needs of academics, and the "fit" of technology to tasks as well as performance. We propose that the adoption of e-books will be dependent on how academics perceive the fit of this new medium to the tasks they undertake as well as what added-value functionality is delivered by the information technology that delivers the content. The study used content analysis and an online survey, administered to the faculty in Medicine, Science and Engineering at the University of New South Wales, to identify the attributes of a TTF construct of e-books in academic settings. Using exploratory factor analysis, preliminary findings confirmed annotation, navigation, and output as the core dimensions of the TTF construct. The results of confirmatory factor analysis using partial least squares path modeling supported the overall TTF model in reflecting significant positive impact of task, technology, and individual characteristics on TTF for e-books in academic settings; it also confirmed significant positive impact of TTF on individuals' performance and use, and impact of using e-books on individual performance. Our research makes two contributions: the development of an e-book TTF construct and the testing of that construct in a model validating the efficacy of the TTF framework in measuring perceived fit of e-books to academic tasks.

Does the interest rate for business loans respond asymmetrically to changes in the cash rate?

Abbas Valadkhani — Sun, 20 Jan 2013 17:20:27 PST

This article examines the dynamic relationship between the Reserve Bank of Australia's (RBA's) cash rate and the variable interest rate for lending to small businesses. The relationship is evaluated via an asymmetric GARCH model using monthly data spanning from August 1990 to October 2012. Our results show that a 1 percentage point increase in the cash rate results in an instantaneous 1.086 percentage point rise in the variable rate for small businesses, whereas an equivalent 1 percentage point cut only leads to a 0.862 percentage point fall with a delay of up to 2 months. This outcome has obvious implications for the RBA's monetary policy transmission mechanism and the effectiveness of the expansionary policy versus contractionary policy.

Downward stickiness of interest rates in the Australian credit card market?

Abbas Valadkhani — Sun, 20 Jan 2013 17:20:27 PST

Championing SME eCollaboration

Lois Burgess — Wed, 16 Jan 2013 21:02:33 PST

Collaboration and eCollaboration are arguable necessities for firms in today's economic age. Gone are the times when a firm could stand alone in the market warding off the competitive pressures of rival firms. Today, just the competitive forces of globalization alone are significant drivers to enable collaboration amongst rivals. The advantages of collaboration and eCollaboration for SMEs are profuse, providing small firms a measure of economic security in a world in which many industries face hyper-competition, particularly from countries with very low costs of labor. In discussing the nature and advantages of eCollaboration, the need for an eCollaboration champion becomes apparent. This case discusses eCollaboration from the perspective of 70 Australia SMEs and presents a model for the successful championship. In so doing, it discusses the multiple roles a champion must embrace and the various issues and dilemmas that are contingent to these roles.

A project sponsor's impact on practice-based learning within projects

Andrew J. Sense — Wed, 16 Jan 2013 20:55:20 PST

Drawing on a longitudinal action research case study analysis of project-based learning, this paper seeks to advance a deeper understanding of a project sponsor's impact on practice-based learning activity within a project. It represents a first case examination of the interface between a sponsor and practice-based learning phenomenon within projects. The reported findings argue for the project sponsor role to be acknowledged as dynamic and interactive and a dramatic influence on project practice-based learning. It also implies that a sponsor confronts some significant dilemmas in successfully stewarding such learning. Moreover, through such endeavour, the sponsor may also become an agent for organizational learning. The findings generated also encourage further investigations into the nexus between the sponsor and other social phenomenon within projects.

Tell me who you think you are and I tell you how you travel : Exploring the viability of market segmentation by means of travelers' stated personality: Insights from a mature market (Switzerland)

Christian Laesser — Wed, 16 Jan 2013 20:55:20 PST

People travel to different destinations for different reasons. In this study, we investigate the viability of market segmentation by personal traits (based on and exemplified by Jungian's MBTI variables) of travelers from Switzerland, by performing a data-driven a posteriori segmentation by means of k-means clustering. To identify the segmentation power of personal traits, this analysis is complemented with a multiple discriminant analysis as well as a number of contingency tests to identify differences between the segments. We identified four clearly definable segments, which differ in terms of the psychographic traits of the segment members but also in terms of some sociodemographic characteristics as well as travel profiles. Despite a growing body of work on classical market segmentation, there is a growing but still limited number of works on potentialities of psychographic approaches relating to a traveler's traits and/or peronality as a segmentation basis in tourism.

Community acceptance of recycled water - can we inoculate the public against scare campaigns?

Byron Kemp — Wed, 16 Jan 2013 20:55:20 PST

Without improved water resource management, it is predicted that water shortages will affect two-thirds of humanity by 2025. One solution that has traditionally faced fierce public resistance is recycled waste water. This study investigates the extent to which public communication strategies can influence community acceptance of recycled water, using the framework of Inoculation Theory. A four-phase experimental design was conducted. Participants completed an initial questionnaire and were then randomly assigned to a control group, a manipulation check group or a treatment group. A final follow-up survey measured changes in the dependent variable: stated likelihood of using recycled water for different uses. Results indicate that communication strategies based on Inoculation Theory are limited in their effectiveness for this product category. Findings do, however, identify a clear recency effect, indicating that continuous public communications are key to ensuring that community scare campaigns do not prevent implementation of water augmentation projects. This study differs from previous applications of Inoculation Theory because of the challenges associated with marketing a monopoly commodity, which is a necessity to support life. This empirical study uses fictional marketing stimuli to test the theory in a context, which is growing in global importance.

The preponderant causes of the USA banking crisis 2007-08

Eduardo Pol — Wed, 16 Jan 2013 20:50:22 PST

Scientific research on the banking crisis 2007-08 has answered many important questions according to generally accepted methodological standards. However, there remains at least one outstanding question that has not been answered with methodological accuracy: What caused the severe USA banking crisis 2007-08? To address this question the paper uses a counterfactual definition of 'cause,' distinguishes between separable and non-separable causes, and employs a well-posed methodology for the causation analysis of singular events. In addition, first causes and preponderant causes are distinguished. The main result of this paper is that the preponderant causes of the banking crisis 2007-08 were securitization and ignorance.

Public sector commercial orientation and the social contract: a study of performance management in a non-competitive environment

Ali Rkein — Wed, 16 Jan 2013 20:50:22 PST

Purpose - The aim of this paper is to study the workings of commercial orientation, with a focus on performance management, in an environment that is characterised by limited competition between the public and the private sectors and a high level of government social responsibility. Design/methodology/approach - An interpretive case study approach is adopted for this study. It draws on primary data from interviews with key personnel in public sector organisations, and on secondary data from government publications such as annual reports and budget papers. Findings - This study shows that the market-based performance management system has failed to achieve its intended objectives because it was introduced in a socio-economic context that is hardly supportive of market management practices. The study shows that service delivery to the public has remained driven by social rather than economic imperatives. In the absence of other service providers, the Government's social responsibility towards its citizens has compelled service provision irrespective of the cost and reduced the cost-benefit relationship in having informative costing systems. Practical implications - Examining the workings of a market-based performance management system in a non-competitive setting provides evidence of the difficulty of achieving the intended benefits from the adoption of commercial practices in public sector agencies in some cases. Originality/value - Whereas extant literature focuses on the adoption of business practices in the process of public sector reform, no prior study has looked at this concept in a non-competitive market. Understanding the workings of the market practices in such an environment where contestability is limited is fundamental to policy makers and researchers.

An activity-theory analysis of corporate wikis

Helen M. Hasan — Wed, 16 Jan 2013 20:50:21 PST

Purpose: Wiki technologies, which are popular in social settings, are beginning to contribute to more flexible and participatory approaches to the exploitation of knowledge in corporate settings. Through the lens of activity theory, this paper aims to investigate contentious challenges to organizational activities that may be associated with the introduction of corporate wikis, in particular the potential democratization of knowledge work. Design/methodology/approach: From a study of several cases of corporate wiki adoption, this paper presents and interprets two representative cases sampled to provide more generalized results. Qualitative data were collected through semi-structured interviews and observation. The analysis followed a systematic process of data reduction, display, and rich interpretation using the concepts of activity theory. Findings: This research provides new understandings of the undervalued activities of knowledge workers, their challenges as wiki users and resulting implications for organizational transformation and improved organizational performance. Research limitations/implications: There is potential bias and limited scope as the choice of cases was determined through organizations known to the researchers and involved some action research. However, the authors justify this approach for a dynamic, emergent topic worthy of immediate investigation and direct applicability of findings to corporate practice. Social implications: This paper addresses the implications of new Web 2.0 technologies for the democratization of knowledge management in the workplace. Originality/value: The novelty of this work lies in using activity theory to explore reasons why some organizations are more successful than others in implementing wikis. This work contributes to research on how social and technological interventions may lead to improved exploitation of knowledge as a corporate resource.

Why do some business relationships persist despite dissatisfaction? a social exchange review

Venkata K. Yanamandram — Wed, 16 Jan 2013 20:50:21 PST

This paper reviews the relevant theories and marketing literature to develop a theoretical foundation for understanding the process and outcome of struggling business-to-business (B2B) customer relationships. Specifically, the paper provides a social exchange perspective of the factors that influence the likelihood of dissatisfied customers remaining in a present relationship by serving as deterrents to discontinuing the relationship. In doing so, the paper identifies the common features of, noteworthy differences among, and gaps in these theories. The paper also connects determinant factors to an outcome variable in order to explain what drives a customer in managing an unsatisfying business relationship, and therefore makes a conceptual contribution by proposing the effect of mediating variables, namely dependence and calculative commitment. Support for the hypothesised relationships would imply that specific investments are related to dependence or calculative commitment, which continues to play a role in generating customer outcomes.

C-OAR-SE-based single-item measures for the two-stage Technology Acceptance Model

John R. Rossiter — Wed, 16 Jan 2013 20:45:31 PST

This article addresses the scope and nature of the two-stage (adoption then usage) Technology Acceptance Model, TAM. The first contribution is to use C-OAR-SE theory to provide new and valid single-item measures of TAM's stagewise paired constructs intended to replace the non-valid and inefficient multiple-item measures used by TAM researchers at present. The second contribution is to demonstrate that individual-level frequency counts and cross-tabulations reveal more about how TAM works in its potential adopter stage and its current user stage than the usual group-level correlation and regression analyses.

The value of political connections when accessing the IPO market

Qigui Liu — Wed, 16 Jan 2013 20:45:31 PST

In this study we examined the value of political connections in firms' access to the IPO market using a sample of Chinese IPO applications from 2006 to 2010. We found a positive relationship between political connections and the probability of IPO approval, and this relationship is strengthened in entrepreneurial firms and weakened in those firms controlled by the state. We further provide evidence that entrepreneurial firms with a disproportional ownership structure and without high technology benefit more from political connections. Our additional tests showed that entrepreneurial (state) firms with political connections also performed better (worse) than firms without. We argue that in emerging markets where the institutional legal system is weak, the value of political connections exists not only in private financial financing markets, but also in public equity markets.