An appropriate risk addendum for risky projects

2016 ◽  
Vol 42 (6) ◽  
pp. 604-616 ◽  
Author(s):  
Pradip K. Bhaumik
Keyword(s):  
Discount Rate ◽  
Perceived Risk ◽  
Design Methodology ◽  
Cost Of Capital ◽  
Case Scenario ◽  
Content Type ◽  
Business Operations ◽  
Clear Guideline ◽  
Practical Implications ◽  
Risky Projects

Purpose – Despite many troublesome aspects in its use, the risk-adjusted discount rate has survived and continues to be extensively used by practitioners. While the appropriate discount rate for projects as risky as the current business operations of the firm can be estimated relatively easily as the firm’s cost of capital, no clear guideline is available for projects with a higher risk profile. The purpose of this paper is to evaluate an appropriate risk addendum for such risky projects. Design/methodology/approach – Extending the framework developed by Davies et al. (2012), the perceived risk in a project is captured by focussing on a downside case scenario and estimating its probability and severity. An expression is then developed for the risk addendum (as an addendum to the firm’s cost of capital) that can be used to find the value of a risky project. Findings – The risk addendum is found to depend only on the product of the probability (p) and the severity (d) of the downside case scenario and not on either of them individually It was also found that the risk addendum rises fast for projects with shorter lives and so is the highest for risky projects with short lives. Practical implications – Managers can use the expression derived to evaluate an appropriate risk addendum for risky projects. Originality/value – The paper suggests a simple framework to quantify the risk involved in a project and to evaluate an appropriate risk addendum.

Trust, risk and transaction intention in consumer-to-consumer e-marketplaces

2019 ◽  
Vol 119 (2) ◽  
pp. 331-350 ◽  
Author(s):  
Kangning Wei ◽  
Yuzhu Li ◽  
Yong Zha ◽  
Jing Ma
Keyword(s):  
Qualitative Study ◽  
Perceived Risk ◽  
Design Methodology ◽  
Future Research ◽  
Trust Building ◽  
Content Type ◽  
Online Transactions ◽  
Starting Point ◽  
Different Types ◽  
Practical Implications

Purpose The purpose of this paper is to compare the relative impacts of trust and risk on individual’s transaction intention in consumer-to-consumer (C2C) e-marketplaces from both the buyers’ and the sellers’ perspectives. Design/methodology/approach Two surveys were used to collect data regarding buyers’ and sellers’ perceptions and transaction intentions at a typical C2C e-marketplace. Partial least squares was used to analyze the data. A complementary qualitative study was conducted to triangulate the results from the quantitative study. Findings Institution-based trust (IBT) exerts a stronger influence on transaction intentions for buyers than for sellers. Sellers perceive a stronger impact of trust in intermediary (TII) than buyers on transaction intentions. The impacts of perceived risk in transactions are not different between buyers and sellers. Furthermore, IBT mediates the impacts of TII and perceived risk on transaction intentions for buyers. Research limitations/implications The results indicate that the impacts of trust and risk on transaction intention in e-marketplaces do differ between buyers and sellers. This suggests a need to further investigate the buyer–seller difference in online transactions. Practical implications Intermediaries need to focus on different types of trust-building mechanisms when attracting buyers and sellers to make transactions in the e-marketplace. Originality/value C2C e-marketplaces cannot survive without participation from both buyers and sellers. Most prior research is conducted from the buyers’ perspective. This research sets a starting point for future research to further explore the differences between buyers’ and sellers’ behavior in C2C e-commerce environments.

scholarly journals A benchmark modelling for participation-based tax increment financing

2020 ◽  
Vol 12 (2) ◽  
pp. 253-264
Author(s):  
Yusuf Varli ◽  
Gokhan Ovenc
Keyword(s):  
Interest Rate ◽  
Design Methodology ◽  
Stochastic Modelling ◽  
Base Case ◽  
Tax Increment Financing ◽  
Case Scenario ◽  
Base Case Scenario ◽  
Content Type ◽  
The Interest Rate ◽  
Practical Implications

Purpose This paper aims to present the theoretical and conceptual framework of a new method in public finance called “participation based tax increment financing (P-TIF)” by combining conventional tax increment financing (TIF) within the Sharīʿah-compliance structure. Design/methodology/approach This study develops a benchmark model for P-TIF, which offers a participative contract between both lender and borrower. With the help of this model, a financing schema in P-TIF is established by incorporating stochastic modelling. Possible implications and alternative options of application are also explored with a discussion of challenges. Findings The results mainly indicate that P-TIF promises lenders to be a part of increment from tax earnings, in return for a reduced interest rate. They show how a rise in participation of the lender in a given contract lowers the interest rate. Under the base case scenario, the interest rate is reduced to zero when the participation of the lender in tax increment is set at 50%. Practical implications With the feature of being interest-free, P-TIF can be implied also within the Sharīʿah-compliance framework, thanks to the model it is based on. Additionally, as the model in this paper is parametric, it can be applicable to various cases in Islamic finance. Originality/value To the best of our knowledge, this is the first paper in the literature in the sense that it provides a conceptual idea and respective model for TIF method within a Sharīʿah-compliance framework.

Business relations on the global stage

2017 ◽  
Vol 33 (8) ◽  
pp. 23-26
Keyword(s):  
Design Methodology ◽  
Project Managers ◽  
Multicultural Teams ◽  
Cultural Backgrounds ◽  
Open Communication ◽  
Content Type ◽  
Business Operations ◽  
Values And Beliefs ◽  
Pertinent Information ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Globalization has prompted a massive increase in international business projects involving multicultural teams. Project managers face a challenging task to bring together various individuals from diverse cultural backgrounds. Trust is imperative if such business operations are to succeed as it inspires more open communication and collaboration. However, with people bringing different norms, values, and beliefs into the equation, distrust is often more likely. Various characteristics can be important, meaning that significant potential exists for trust levels to be influenced by differences in both national and organizational culture. Practical implications The paper provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Applying Merton’s valuation adjustment for incomplete information … and do you need to?

2019 ◽  
Vol 46 (1) ◽  
pp. 109-119
Author(s):  
Thomas O’Brien
Keyword(s):  
Best Practices ◽  
Incomplete Information ◽  
Empirical Research ◽  
Discount Rate ◽  
Design Methodology ◽  
Idiosyncratic Risk ◽  
Content Type ◽  
Market Capitalization ◽  
Empirical Estimates ◽  
Practical Implications

Purpose The purpose of this paper is to offer a “how to” guide for applying Merton’s (1987) valuation adjustment for incomplete information, which depends on market capitalization, idiosyncratic risk and extent of investor ownership. Design/methodology/approach The paper illustrates Bodnaruk and Ostberg’s (2009) formula for Merton’s adjustment, and presents some example empirical estimates of the adjustment for some US stocks. Findings The adjustment estimates are material for many example stocks, particularly volatile stocks with a low percentage of shares held by institutional funds. However, the adjustment estimates are modest for many other stocks, including some smaller cap. stocks. Research limitations/implications Measuring the model’s inputs requires using some judgment, particularly regarding the investor ownership variable. The paper will hopefully help stimulate useful empirical research on adjustment estimates and on best practices for applying the model. Practical implications The paper may encourage more use of the incomplete-information adjustment in practice, which should lead to improved discount rate estimates in valuation analyses. Originality/value No other “bridge the gap” coverage of the incomplete-information adjustment is available in textbooks or the applied literature.

How the human-machine interchange will transform business operations

2019 ◽  
Vol 47 (2) ◽  
pp. 25-33 ◽  
Author(s):  
Karen Butner ◽  
Grace Ho
Keyword(s):  
Design Methodology ◽  
Best Practice ◽  
Business Processes ◽  
New Technologies ◽  
Cost Effective ◽  
Human Mind ◽  
Specific Knowledge ◽  
Content Type ◽  
Business Operations ◽  
Practical Implications

Purpose Machine learning is beginning to transform the way businesses organize their operations and benefit from technology investments. Design/methodology/approach To learn more about how far along organizations are in deploying intelligent automation and in developing plans and strategies for its adoption, the IBM Institute for Business Value, in collaboration with Oxford Economics surveyed and interviewed 550 technology and operations executives. Findings The primary purpose of intelligent automation is to augment employees’ skills, experience and expertise, extending the human mind in ways that allow for higher productivity, creative problem-solving and more engaging jobs for employees. Practical implications Automation is not a plug-and-play solution: companies cannot just buy the technology, flip the switch and watch robots run the business without any human intervention. Originality/value This recent survey of operations executive with specific knowledge of their companies plans provides insights into best practice. Executives believe that layering new technologies on top of old business processes is apt to be less productive ? and less cost-effective ? than rethinking processes to make the most of intelligent automation. Executives must optimize workflows for automation; this means envisioning the end result, enabling it through logical steps and prototyping the process ? then repairing as necessary before scaling.

The effect of cultural tightness–looseness on fraud perception in insurance services

2018 ◽  
Vol 10 (2) ◽  
pp. 138-148 ◽  
Author(s):  
Haithem Zourrig ◽  
Jeongsoo Park ◽  
Kamel El Hedhli ◽  
Mengxia Zhang
Keyword(s):  
Perceived Risk ◽  
Design Methodology ◽  
European Social Survey ◽  
European Countries ◽  
Insurance Fraud ◽  
Insurance Claim ◽  
Social Survey ◽  
Content Type ◽  
Effective Learning ◽  
Practical Implications

Purpose The purpose of this paper is to investigate how cultural tightness may influence consumers’ attitudes toward insurance services and occurrence of insurance fraud. Design/methodology/approach Drawing on Gelfand et al.’s (2011) theory of tight and loose cultures, the authors theorize that perceived wrongness of insurance fraud, fraud occurrence and perceived risk of being caught depend on the cultural tightness. Using field data from a global European social survey (ESS), the authors investigate these differences across two fairly different European countries – Norway (i.e. tight culture) and Ukraine (i.e. loose culture). Findings Consumers from tight culture report less tolerance for insurance fraud (inflating insurance claim) are less likely to commit an insurance fraud, and they perceive higher level of risk of being caught than their counterparts from loose culture (Ukraine). Practical implications Understanding cultural variability in attitude toward insurance fraud, the occurrence of insurance fraud and the sensitivity to the risk of being caught could enrich the authors knowledge about how to prevent insurance fraud. Social implications Consumer protection agencies, consumer educators and policymakers could all benefit from understanding cultural variability in attitude toward fraud. This will potentially help to design effective learning and education programs to sensitize customers to the illegal and unethical aspects of fraudulent behaviors. Originality/value Insurance fraud is a universal issue and exists in many European countries, yet no previous work has investigated the effect of cultural tightness–looseness on fraud perception.

Consumer value creation through WhatsApp use

2019 ◽  
Vol 32 (4) ◽  
pp. 455-471
Author(s):  
Jorge Cruz-Cárdenas ◽  
Jorge Guadalupe-Lanas ◽  
Ekaterina Zabelina ◽  
Andrés Palacio-Fierro ◽  
Margarita Velín-Fárez ◽  
...  
Keyword(s):  
Latin American ◽  
Value Creation ◽  
Emotional Support ◽  
Design Methodology ◽  
Instant Messaging ◽  
Role Performance ◽  
Content Type ◽  
Consumer Value ◽  
Depth Interviews ◽  
Practical Implications

Purpose The purpose of this paper is to understand in-depth how consumers create value in their lives using WhatsApp, the leading mobile instant messaging (MIM) application. Design/methodology/approach The study adopts the perspective of customer-dominant logic (CDL) and uses a qualitative multimethod design involving 3 focus groups and 25 subsequent in-depth interviews. The research setting was Ecuador, a Latin American country. Findings Analysis and interpretation of the participants’ stories made it possible to identify and understand the creation of four types of value: maintaining and strengthening relationships; improving role performance; emotional support; and entertainment and fun. In addition, the present study proposes a conceptual model of consumer value creation as it applies to MIM. Practical implications Understanding the way consumers create value in their lives using MIM is important not only for organizations that offer MIM applications, but also for those companies that develop other applications for mobile phones or for those who wish to use MIM as an electronic word-of-mouth vehicle. Originality/value The current study is one of the first to address the topic of consumer behavior in the use of technologies from the perspective of CDL; this perspective enables an integrated qualitative vision of value creation in which the consumer is the protagonist.

scholarly journals Advantages and potential challenges of data management in e-maintenance

2019 ◽  
Vol 25 (3) ◽  
pp. 378-396 ◽  
Author(s):  
Arian Razmi-Farooji ◽  
Hanna Kropsu-Vehkaperä ◽  
Janne Härkönen ◽  
Harri Haapasalo
Keyword(s):  
Data Management ◽  
Design Methodology ◽  
Management Practices ◽  
Future Research ◽  
Conceptual Approach ◽  
Content Type ◽  
Different Types ◽  
Maintenance Systems ◽  
Industry Leader ◽  
Practical Implications

Purpose The purpose of this paper is twofold: first, to understand data management challenges in e-maintenance systems from a holistically viewpoint through summarizing the earlier scattered research in the field, and second, to present a conceptual approach for addressing these challenges in practice. Design/methodology/approach The study is realized as a combination of a literature review and by the means of analyzing the practices on an industry leader in manufacturing and maintenance services. Findings This research provides a general understanding over data management challenges in e-maintenance and summarizes their associated proposed solutions. In addition, this paper lists and exemplifies different types and sources of data which can be collected in e-maintenance, across different organizational levels. Analyzing the data management practices of an e-maintenance industry leader provides a conceptual approach to address identified challenges in practice. Research limitations/implications Since this paper is based on studying the practices of a single company, it might be limited to generalize the results. Future research topics can focus on each of mentioned data management challenges and also validate the applicability of presented model in other companies and industries. Practical implications Understanding the e-maintenance-related challenges helps maintenance managers and other involved stakeholders in e-maintenance systems to better solve the challenges. Originality/value The so-far literature on e-maintenance has been studied with narrow focus to data and data management in e-maintenance appears as one of the less studied topics in the literature. This research paper contributes to e-maintenance by highlighting the deficiencies of the discussion surrounding the perspectives of data management in e-maintenance by studying all common data management challenges and listing different types of data which need to be acquired in e-maintenance systems.

An exploratory empirical study of whistleblowing and whistleblowers

2020 ◽  
Vol 27 (3) ◽  
pp. 755-770
Author(s):  
Maria Krambia-Kapardis
Keyword(s):  
Statistical Analysis ◽  
Design Methodology ◽  
Research Topic ◽  
Due Date ◽  
Content Type ◽  
Unethical Behaviour ◽  
Eu Member States ◽  
European Directive ◽  
Original Survey ◽  
Practical Implications

Purpose The purpose of this study is to develop a profile of whistleblowers and to determine whether whistleblowing legislation would encourage those individuals to bring to light some illegal or unethical behaviour that otherwise would remain in the shadows. Design/methodology/approach Having identified whistleblowing correlation, a survey was carried out in Cyprus of actual whistleblowers and could-have-been whistleblowers. Findings Males between 46 and55 years of age, regardless of whether they have dependents or hold senior positions in organizations are significantly more likely to blow the whistle. However, could-have-been whistleblowers did not go ahead because they felt that the authorities would not act on their information. Research limitations/implications Because of the sensitive nature of the research topic and the fact that only whistleblowers or intended whistleblowers could participate in the study, the sample size is limited as a result. This, in turn, limits both the number of respondents in each category (actual and intended) as well as constrains the statistical analysis that could be carried out on the data. Practical implications It remains to be seen whether EU Member States shall implement the European Directive 2019/1937 on the protection of persons who report breaches of Union Law, in its entirety by the due date, namely December 2021. Originality/value This study provides a literature review of whistleblowing and reports an original survey against the backdrop of the European Directive.

How Phillips saw the light

2020 ◽  
Vol 36 (8) ◽  
pp. 29-31
Keyword(s):  
Design Methodology ◽  
Reading Time ◽  
Daily Basis ◽  
Business World ◽  
Content Type ◽  
Freak Show ◽  
The World ◽  
Pertinent Information ◽  
The One ◽  
Practical Implications

Purpose Reviews the latest management developments across the globe and pinpoints practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings The problem with developing a reputation of being something of an oracle in the business world is that all of a sudden, everyone expects you to pull off the trick of interpreting the future on a daily basis. Like a freak show circus act or one-hit wonder pop singer, people expect you to perform when they see you, and they expect you to perform the thing that made you famous, even if it is the one thing in the world you don’t want to do. And when you fail to deliver on these heightened expectations, you are dismissed as a one trick pony, however good that trick is in the first place. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Sign in / Sign up

Export Citation Format

Share Document