Economics - Theses
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ItemA strategic analysis of takeover behaviour in Australia, 1977-1982( 1987-12)The study aims to increase our understanding of takeover behaviour in Australia by using a strategic framework to analyse a sample of 152takeovers of publicly-listed firms made between 1977 and 1982. A two-level model of takeover strategies is developed to explain how the three general theories of takeover - the economic, the financial and the managerial theory - are each useful in explaining takeover behaviour under certain circumstances. The model classifies takeovers based on analysing four factors, namely the pre-takeover strategy of the acquirer, the industry relationship of the target to the acquirer, whether the acquirer is pursuing shareholder aims or managerial aims primarily, and the pre-takeover competence of the target. Nine takeover strategies are developed from the first-level of the model. These are named after the relationship between the acquirer and its target. They are called the Dominant-Existing, Dominant-Related, Dominant-Unrelated, Related-Existing, Related-Related, Related-Unrelated, Unrelated-Existing, Unrelated-Related and Unrelated-Unrelated acquirer strategies. Pre-takeover financial profiles are developed for each strategy and these profiles are used to infer corporate competencies of the acquirers and their targets. The major questions which are addressed are: Do there appear to be different acquirer strategies occurring in practice? Do different acquirer strategies have different financial profiles, and, by inference, different strategic competencies prior to the takeover? Do different acquirer strategies have different post-takeover outcomes and what is the nature of these outcomes for each strategy? The answer to each question is an emphatic yes. The results clearly identify several different strategies. Pre-takeover financial profiles vary for the major strategies. Post-takeover outcomes differ for the strategies, in accord with the expectations derived from both the strategic theory behind the model and also the empirical pre-takeover data for the particular takeovers in the sample. The outcomes show how the three general theories of takeover behaviour are complementary explanations, when perceived within a strategic framework.
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ItemThe corporate treasury function: risk management and performance measurement( 1997-05)The Australian financial system has changed dramatically in recent years, creating both threats and opportunities for value adding activities. Many large corporations have set up a separate treasury division or department to handle their financing requirements. This thesis derives the rationale for a separate treasury function from theory of the firm. A framework has been developed by drawing upon both the old theory of the firm (transaction cost economics) and the new theory of the firm (agency theory) to determine the appropriate governance structure to manage financial arrangements. Formal analysis of corporate treasury functions and performance measurement research has not kept pace with the growth of treasury activities. Appropriate benchmarks provide management with information to manage financial risk and to more accurately assess treasury performance. A benchmark is required for core treasury tasks, including debt portfolio management. Optimal treasury benchmarks are difficult to determine, due to the complexity involved in measuring financial exposures for firms which derive income from physical, rather than financial assets. The inter-relationships between financial risks, including maturity, interest rate and currency risk, further compounds the problem. Decomposition of financial risk into these respective elements allows identification of the firm specific factors that influence financial exposure. Appropriate benchmarks for managing repricing, refunding and foreign exchange risk depend upon the trade-off between transaction costs, agency costs and information signalling costs. Theory suggests growth options in real assets within the firm's investment opportunity set provide opportunities for natural hedges that offset financial risk. However, empirical analysis of share price sensitivity to interest rates and an analysis of debt maturity structure indicates growth options and agency factors are less important than firm specific characteristics when setting up benchmark portfolios to manage financial risk. Treasuries are often classified as either active or passive managers, but a continuum of strategies is possible when managing financial risk, rather than points at either end of a spectrum. Tolerance levels around the benchmark constrain activity within a relevant range - the more active the treasury, the broader the range. Constraints allow the degree of activity to be fine-tuned. The decision to actively manage risk depends upon whether value can be added in risk-adjusted terms. This is a function not only of whether opportunities exist, but also whether value can be added consistently, compared with a passive approach. The majority of practising treasurers describe themselves as 'active hedgers'. Subject to caveats outlined in the thesis, field experiments conducted over a three year period indicate the ability of corporate treasurers to add value to the firm through outperforming a passive benchmark portfolio of debt is limited. Respondents to an international survey on corporate treasury control and performance standards cited difficulty in setting benchmarks, particularly risk-adjusted benchmarks, as the major reason for not measuring treasury performance. Empirical determinants of benchmark structures for repricing risk, refunding risk and currency risk have been identified. A better understanding of the factors that determine financial risk will assist management when they are designing or refining benchmarks to manage financial risk and measure treasury performance.
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ItemThe relevance of company financial reports for institutional long-term investors( [1969])The title of this thesis refers to 'company financial reports' and to 'institutional long-term investors'. Since these terms are rather broad in meaning it is necessary to give them precise definition. Throughout the thesis, unless otherwise specified, 'company financial reports' refer to the annual reports published by companies as required by S.162 and the Ninth Schedule to the Companies Act 1961. Under the statute, these reports must contain a balance sheet, a profit and loss account (both showing comparative figures for the previous accounting period), an audit report, a directors' report, a certificate relating to any change in the value of certain assets signed by two directors and a certificate, relating to the accuracy of the accounts, signed by the company secretary. In addition, the report should disclose particulars of share options held and/or exercised. If the company is a holding company the annual report must also contain consolidated statements of assets and liabilities and of profit and loss and a list of the names of subsidiary companies or audited annual reports for each of the subsidiary companies. The Companies Act 1961 does not require public circulation of these documents; it merely requires that they be laid 'before the company in general meeting'. However, the combined influence of the Official List Requirements of the Australian Associated Stock Exchanges and the public relations potential of well-prepared and widely-circulated reports has resulted in the reports of listed companies being available to any interested person. (From Introduction)
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ItemCapital expenditure decision making in divisionalised companies: a study of the role of managerial performance measures and other contextual influences( 1990)The accounting literature in the area of divisional performance measurement reflects a significant rift between theory and practice. Theoretical debate has tended to focus on dysfunctional decisions, particularly in the area of capital investment, that may be made by divisional managers seeking to maximise their divisional ROI result. The empirical evidence, however, still indicates the widespread use of ROI and other theoretically questionable performance measures in practice. This research is an attempt to shed light on the rift between theory and practice by studying the capital expenditure decision process intensively in three divisionalised companies. More specifically, an attempt is made to explore the use of accounting measures of managerial performance, the incidence of dysfunctional decision making factors that may mitigate the importance of accounting measurement of managerial performance as decision making. The development of a conceptual framework for the study is greatly influenced by the need to study the role of accounting within its organisational context (Hopwood, 1983; Kaplan, 1984). The conceptual framework has two key elements:1.The distribution of capital expenditure decision making authority within the divisionalised companies, and2. The general nature of organisational control systems. The distribution of authority is conceptually based on the distribution of knowledge and influence, rather than formal authority structures. The conceptualisation of organisational control is broad, and includes both formal and informal influences on managerial behaviour. The findings reflect a distribution of authority which is knowledge-based in relation to initiation and screening elements of the decision process. The findings also provide an insight into the influences on divisional management capital expenditure decisions. In particular they illustrate the role of managerial service histories, corporate familiarity with divisional operations, strategic planning and multiple performance measures within the organisational control system. The development of this understanding has potential to enable us to move beyond the simplified organisational contexts within which we teach and the control of divisionalised operations (Kaplan, 1986). The findings also provide a stimulus to further research – either hypothesis testing in contingency research, or further exploration through intensive field studies.