Risk-oriented internal control: The essence, management methods at small enterprises

The research topic relevance is inspired by necessity to develop theoretical and methodical provisions on the internal control system, risk-based management at small enterprises and to prove application feasibility, using economic-mathematical methods its implementation. The purpose of this research is to develop theoretical and methodical approaches to internal control system formation in small businesses, generating reliable and relevant information on the commercial organization activities, enabling risks identification. The leading approach to study this problem is situational and systematic in the frame of theory and methodology internal control at small businesses in the risk-based management system, allowing to analyze the impact of various risks on small enterprises activity and to systematize obtained results. According to the study results, there were proved the implementing internal control feasibility at small businesses, presenting the author's systematization and classification of internal and external risks in small companies, identifying organizational and methodological approaches to risk-based internal control development; implemented the adaptation of existing economic-mathematical methods within risk-based internal control at small businesses. The article can be useful for practical and scientific workers in the field of company’s internal control, teachers, postgraduates, undergraduates and students, studying Economics and Management at higher educational institutions. © 2016 Piskunov et al

Making Decisions under Uncertainty: Value Chain Development

This presentation provides an overview of the various approaches and theories related to decision-making when faced with uncertainty. The paper's main focus is on the decision-making process itself, including how all its various components should be combined and how they should be reflected in decision rules. While the theme is not new, significant progress has been made in the past century in terms of developing decision-making techniques and measuring and managing uncertainty, largely due to the advancements in probability theory and fuzzy set theory. The goal of this paper is to develop a Value Chain for the Decision-Making process, achieved through the integration of the main components of the decision-making system under uncertainty, namely: (i) concepts of uncertainty, (ii) ways of thinking under uncertainty, (iii) creating models, and (iv) techniques of decision-making. These issues are considered in their dialectical relationship. The presentation will not delve into the specifics of each part of the system but rather aims to explain its essence and practical applicability. Both data-driven decision-making and non-quantitative approaches to making decisions are explored in the presentation

Financial markets' imperfections and technology adoption

This thesis examines information imperfections in asset markets and its impact on economic performance through technology adoption and innovation. In a rational setting, where equity market participants take into account common public information in addition to their private signals about fundamentals, equity prices are persistently biased towards the public signals. Chapter 2 investigates the real effect of such mis-pricing, when R&D producing firms rely on equity finance. Relating to the recent technology stocks boom, the model shows how market's optimism causes more innovations. Furthermore, such optimism can generate gains in aggregate consumption. Chapter 3 analyzes equity markets' role in facilitating ownership transfer from entrepreneurs investing in adopting technology to managers running these firms once technology is adopted. Information imperfections in equity market affect entrepreneurs' willingness to invest in frontier technology in two ways. First, uncertainty about equity price or lack of market liquidity discourages technology adoption. This can explain slow technology adoption and limited venture capitalists' participation in under-developed equity markets. Second, imperfectly informed market participants take fast adoption as a positive signal. The resulting increase of expected market value encourages technology adoption. Probability of fast technology adoption is highest at an intermediate number of informed investors. Chapter 4 looks more closely into the extent of asset mis-pricing by endogenizing the variance of investors' private signals. Better quality of freely available public information reduces incentives to invest in private information and can magnify the extent of asset mis-pricing. Furthermore, in a dynamic setting, investors' react more slowly on changes of the fundamentals because incentives to invest in research are low in early trading periods. The chapter also shows that availability of longer price history might not bring asset prices closer to the fundamentals, as investors choose to free-ride on other investors' research efforts

Econometric and decision analysis studies in research and development in the electronics industry

This thesis is an attempt to contribute to the understanding of the research and development process at the level of the firm. The existing economic evidence on research and development lacks thorough understanding of the nature of the inventive process, even though the volume sponsored by the National Bureau of Economic Research, "The Rate and Direction of Inventive Activity", points to the strikingly micro-character of R and D activity. The thesis has several major objectives:- First, to review the existing economic evidence on research and development and to point to any firm conclusions from the evidence. Second, to describe the nature of research and development in the firm, the characteristics of the inventive process and the decision process in R and D and the nature of uncertainty inherent in R and D activity. Third, to accumulate retrospective evidence on the efficiency of research and development in the firm. Fourth, to try and build operationally useful models to help R and D management cope with the sequential,groping and uncertain nature of R and D activity. These models stress the use of concepts from statistical decision theory and capital budgeting and are based on the decision process analysis work carried out in the firms. Fifth, to evaluate the usefulness and relevance of the rational theories of statistical decision theory in aiding the solution of the R and D decision under uncertainty. The thesis is divided into five parts which present results under each of the five above headings. Throughout the emphasis is on econometric and decision analysis work and parts (ii) to (v) are based on empirical evidence obtained from a case study sample of firms in the electronics industry in Scoreland. The final section discusses the usefulness of the research work and suggests further model-building approaches. Decision theory is found to be more useful on a conceptual- rather than on a practical level because of the uncertain character of R and D activity

Pitfalls of Analysis

Systems Analysis-or Policy Analysis, as it is sometimes called when public problems are being addressed-aims to deepen our understanding of sociotechnical problems, and to bring about improved solutions to them. However, the craft of systems analysis is a relatively new one, and its practitioners are still exploring ways to conduct such analyses properly, a task complicated by the necessary use of tools and knowledge from many disciplines and contexts. Any craft learns both by what works and by what fails to work, and systems analysis is no exception. This book contributes to the craft of systems analysis by describing many pitfalls of analysis that will lead to failure, thus helping analysts and users to recognize and avoid them

Development of bank acquisition targets prediction models

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How does central bank independence affect the conduct and outcome of monetary policy? : A case study : Bank of England versus Bundesbank

The question whether monetary policy should be subject to discretion or whether some kind of rule should be imposed upon its conduct has been and is subject to intensive debate. The theoretical rationale for central bank independence is to be found in the 'time-inconsistency' literature, which demonstrates that if monetary policy is entrusted in discretionary fashion to policy makers, they have an incentive to renege on their precommitment since they favour short-run output gains. The public forms expectations about the credibility of a pre-announced strategy of the policy maker. It is argued that an independent monetary authority, which is committed to price stability, would be an accountable player in the monetary policy game, removing the need for the wage bargainers to protect themselves against inflationary surprises. Many studies have been dedicated to approach the 'case for central bank independence' from the empirical side. Various indices of central bank independence have been developed, based on a uniform assessment procedure which allows a comparison of alternative monetary arrangements according to their degree of independence. An inverse relationship between the rate of inflation and central bank independence is generally advocated. The empirical findings, however, suggest a less clear-cut relationship than that claimed by the theoretical literature. To allow a well-founded statement about how central bank independence affects the conduct and outcome of monetary policy, one needs to look at different monetary regimes. The Bank of England, politically dependent on the government, and the independent German Bundesbank have been chosen as test cases. The inflationary performance of Germany has been on average better and more stable when compared to the United Kingdom's record. The respective monetary arrangement determined and had at times decisive influence on policy decisions. The discretionary regime in the United Kingdom allowed the authorities recourse to expansionary monetary policies, whereas this was impossible for the German government, since the Bundesbank conducts its policy independent from government directives and adheres to its pre-eminent task of safeguarding the currency. It is concluded that an independent central bank which is committed to price stability generates a better inflationary outcome than that achieved with a discretionary conduct of monetary policy. Furthermore, autonomy and the commitment to protecting the internal value of the currency are important devices for building an anti-inflationary reputation

Large-Scale Modelling and Interactive Decision Analysis

These Proceedings report the scientific results of an International Workshop attended by more than fifty scientists from thirteen countries. This volume is structured in three parts: (I) Theory and Methodology, (II) Interaction Principles and Computational Aspects and (III) Applications. Part I contains papers dealing with utility and game theory, multicriteria optimizations theory and interactive procedures, dynamic models/systems and concepts of multicriteria analysis. Papers dealing with the user-machine interface, intelligent (user-friendly) decision support and problems of computational aspects are included in Part II. Contributions with applications are mainly concentrated in Part III but can also be found in several papers in other parts. Use of the term "large-scale" in the title of the Proceedings was especially substantiated by contributions dealing with modelling and decision analysis problems of the size of a whole national economy like structuring the carbochemical industry, the energy system or even natural gas trade in Europe

Investment, growth and government policy in an economy characterised by oligopolistic and competitive sectors

This thesis investigates the theoretical coherence and empirical validity (in the UK context) of the economic school whose main proponent is Alfred Eichner. The main questions addressed concern (1) the duality of pricing, savings and investment behaviour between competitive and oligopolistic sectors and (2) the implications of the cyclical financial surplus that emerges in the oligopolistic sector during the upturn. The cycle is explained as the outcome of government reaction to the consequences of this financial surplus, rather than as a reaction to capacity or trade constraints. The thesis investigates the role and effectiveness of policy instruments aimed at strengthening and prolonging the cyclical upswing so as to achieve an upward revision to the secular growth rate. The thesis makes original contributions by extending the formal treatment of the effect of the oligopolistic financial surplus. It also locates the theory in its historical theoretical context and demonstrates that it can apply also to the case of an open economy. It collates evidence on capacity and trade constraints on the UK economy to support the argument that they do not constitute sufficient reasons for government deflationary action. The duality of the UK economy is demonstrated in respect of pricing behaviour by collating the results of existing studies. Duality in respect of savings and investment behaviour is confirmed by an original study of Company Accounts data. Investment duality is confirmed as a by-product of two further studies which have the main aim of establishing that traditional investment-directed instruments are not effective in the short-run ( -for the oligopolistic sector and thus cannot be relied on to reduce its financial surplus. These studies are supplemented by a survey of existing literature on investment. Finally, the role of heterodox policy instruments in prolonging a cyclical upswing is examined in the context of the theoretical approach adopted