Showing papers by "Indian Institute of Management Ahmedabad published in 2007"

Shadow Sovereign Ratings for Unrated Developing Countries

Abstract: The authors attempt to predict sovereign ratings for developing countries that do not have risk ratings from agencies such as Fitch, Moody's, and Standard and Poor's. Ratings affect capital flows to developing countries through international bond, loan, and equity markets. Sovereign rating also acts as a ceiling for the foreign currency rating of sub-sovereign borrowers. As of the end of 2006, however, only 86 developing countries have been rated by the rating agencies. Of these, 15 countries have not been rated since 2004. Nearly 70 developing countries have never been rated. The results indicate that the unrated countries are not always at the bottom of the rating spectrum. Several unrated poor countries appear to have a B or higher rating, in a similar range as the emerging market economies with capital market access. Drawing on the literature, the analysis presents a stylized relationship between borrowing costs and the credit rating of sovereign bonds. The launch spread rises as the credit rating deteriorates, registering a sharp rise at the investment grade threshold. Based on these findings, a case can be made in favor of helping poor countries obtain credit ratings not only for sovereign borrowing, but for sub-sovereign entities' access to international debt and equity capital. The rating model, along with the stylized relationship between spreads and ratings can be useful for securitization and other financial structures, and for leveraging official aid for improving borrowing terms in poor countries.

Does culture influence learning styles in higher education

Abstract: This paper develops a framework for understanding the relationships between approaches to learning adopted by students in the context of higher education and the culture of the country they were brought up in. The paper, after examining the more widely used Kolb's learning styles, opts for another categorisation, namely the so called learning approaches developed by Entwistle and others (for example, Entwistle and Ramsden, 1983; Biggs, 1987; Entwistle, 1992; Tait, Entwistle and McCune, 1998; Biggs, Kember and Leung, 2001). Each of the main categories of learning approaches identified by his school, namely, deep, surface apathetic, and strategic are related to Hofstede's cultural dimensions, namely, power distance, individualism vs. collectivism, uncertainty avoidance, long vs. short time orientation and masculinity vs. femininity and a series of hypotheses developed that could be tested in cross cultural samples. This study would give practical hints on students moving out to study in different cultures (e.g. for higher education) and for teachers dealing with students from multiple cultures.

Cancellation of Multiuser Interference Due to Carrier Frequency Offsets in Uplink OFDMA

Abstract: In uplink orthogonal frequency division multiple access (OFDMA) systems, multiuser interference (MUI) occurs due to different carrier frequency offsets (CFO) of different users at the receiver. In this paper, we present a multistage linear parallel interference cancellation (LPIC) approach to mitigate the effect of this MUI in uplink OFDMA. The proposed scheme first performs CFO compensation (in time-domain) followed by K DFT operations (where K is the number of users) and multistage LPIC on these DFT outputs. We scale the MUI estimates by weights before cancellation and optimize these weights by maximizing the average signal-to-interference ratio (SIR) at the output of the different stages of the LPIC. We derive closed-form expressions for these optimum weights. The proposed LPIC scheme is shown to effectively cancel the MUI caused by the other user CFOs in uplink OFDMA. While our proposed approach performs CFO compensation in time-domain, an alternate approach proposed recently by Huang and Letaief performs CFO compensation and interference cancellation in frequency-domain. We show that our approach performs better than the Huang & Letaief's approach when the magnitude of the CFO differences (between desired user CFO and other user CFOs) are small, whereas their approach performs better when the magnitude of the individual CFOs (of other users) are small. Since the CFO values can be arbitrary at the receiver, in order to make the receiver robust under various CFO conditions, we propose simple metrics based on CFO knowledge, which the receiver can compute and use to choose between the time-domain (ours) and the frequency-domain (Huang & Letaief's) cancellers so that better performance among the two approaches is achieved under various CFO conditions.

The Impact of Fundamentals on IPO Valuation

Abstract: We investigate IPO valuation for a sample of 1,655 IPOs from three time-periods: 1986-1990, January 1997 through March 2000 (designated as the boom period), and April 2000 through December 2001 (designated as the crash period). We find that firms with more negative earnings have higher valuations than do firms with less negative earnings and firms with more positive earnings have higher valuations than firms with less positive earnings. This V-shaped pattern to the relation between value and earnings suggests that inference based solely on firms with positive earnings is inaccurate. This is especially true for the boom and crash periods. Our results suggest that negative earnings are a proxy for growth opportunities for internet firms. We also find that investment bankers and first-day investors assign different weights to post-IPO ownership and changes in ownership around the IPO for different classes of pre-IPO shareholders (CEOs, VCs, other blockholders, and officers and directors) when pricing the IPO.

Towards Reform of Land Acquisition Framework in India

Abstract: We bring out the fundamental and more important problems with the current framework of land acquisition in India, regulations on land and the functioning of land markets. We argue that reform is overdue and the current framework would be unsustainable in a democracy that is India. Current land prices are highly distorted owing largely to regulatory constraints and the process of takings. Land acquisition more than any other factor is the most important constraint on development and especially in infrastructure development. We bring out the core elements of the reform – the need to define “public purpose” ex-ante for compulsory acquisition of land, the measures that would allow the market price of land to play its correct role, and the approach to valuation. We also argue for an independent valuer when compulsory taking is involved and methods of valuation to ensure that the land owner including the farmer gets the correct value for this land in both compulsory acquisition and in voluntary sale. We also argue the need for a parallel non-compulsory framework for acquisition and develop the key elements of the same. We also bring out alternatives to physical acquisition of land especially in the context of infrastructure development in central places.

Supply Chain Contracts with Capacity Investment Decision: Two-Way Penalties for Coordination

Abstract: Supply chain contracting has been discussed usually under the two compliance regimes, forced and voluntary. Various contracts show different coordination characteristics in the two regimes. However, in practice, the enforcement of quantities in case of forced compliance is always an issue of concern. We propose a price compliance regime for contract where the penalties are enforceable on both parties, which are price for non compliance on quantities. In this paper, we attempt to model a contract where supplier needs to build capacity before demand is realized under the proposed price compliance regime. A need for investment in capacity can be of the form of new capacity installation or capacity enhancement or updating, and is prevalent in practice, especially in industries which witness shorter product life cycles, high rate of new product launches, and in high-tech industry. Since under-investment in capacity by supplier is a major concern for manufacturer, we model contract with supply chain capacity and cost to build the capacity are included in the model and analyze how the manufacturer can influence the capacity decision of supplier with the given contract. We analyze the impact of various penalty parameters on vendor's capacity decision, supply chain efficiency and relative allocation of supply chain profit across partners. Further, we consider a special case of uniformly distributed demand and find analytical closed form conditions for a sub-set of coordination conditions. We also consider a special case where buyer and supplier arrive at consensus on capacity related decision and capacity is verifiable by buyer.

Securitization: The Tool of Financial Transformation

Abstract: Securitization as a financial instrument has had an extremely significant impact on the world's financial system. First, by integrating capital markets and the uses of resources - such as mortgage originators, finance companies, governments, etc. - it has strengthened the trend towards disintermediation. Having been able to mitigate agency costs, it has made lending more efficient; evidence of this can be observed in the mortgage markets. By permitting firms to originate and hold assets off the balance sheet, it has generated much higher levels of leverage and, though arguably, greater economies of scale. Combination of securitization techniques with credit derivatives and risk transfer devices continues to develop innovative methods of transforming risk into a commodity and allow various market participants to tap into sectors which were otherwise not open to them. In its broadest sense, the term "securitization" implies a process by which a financial relationship is converted into a transaction. A financial transaction is the coming together of two or more entities; a financial relationship is their staying together. For example, a loan to a corporation is a financial relationship; once the loan is transformed into a tradable bond, it is a transaction. We find several examples in the history of the evolution of finance of relationships that have been converted into transactions. The creation of "stock," representing ownership in a corporation, is one of the earliest and most important examples of this process because of its impact on the growth of the corporate form of business organization. The process of converting loans to corporations of high credit quality corporate borrowers, and in the 1970s expanding that opportunity to speculative-grade corporate borrowers, into publicly traded bonds is another example of this. Commercial paper is another example of securitization of relationships as it securitizes a trade debt.

Dividend behaviour of Indian companies under monetary policy restrictions

Abstract: Purpose – The dividend payout behaviour of firms is a well‐studied subject in finance. In recent times, the influence of macro economic factors and understanding their implications far corporate financial decisions has assumed significant importance. The objective of this paper is to study the dividend payout behaviour of firms in India under monetary policy restrictions. Monetary policy restrictions are expected to affect the availability and cost of external fund relative to internal funds. The hypothesis is that during monetary policy restrictions the dividend payout policy changes and payouts reduce.Design/methodology/approach – The Lintner framework is extended to examine the impact of these restrictions on the dividend payout. Balanced panel data of 571 firms for years are used, from 1989 to 1997 together with, the GMM estimator, which is the most suitable methodology in a dynamic setting.Findings – The results show that Indian firms have lower target ratios and higher adjustment factors. The findin...

Empirical examination of diversification strategies in business groups

Abstract: Purpose – To examine the influence of direction of related and unrelated diversification on business groups' performance in emerging markets.Design/methodology/approach – The paper empirically examines a hypothesis based on the theoretical perspective of the resource‐based view. The paper builds a regression model with the dependent variable Tobin's q as a proxy for group/firm value and various other performance measures (derived from financial data) that theory suggests influences firm value. It examines the differences in firm value measure across three classes, namely related‐diversified business groups, unrelated‐diversified business groups and standalone firms.Findings – The results confirm the findings of prior research which suggests that group affiliation is beneficial in emerging markets. However, as a departure, the main finding is that the benefits of group affiliation are not equally available to related‐diversified and unrelated diversified groups.Research limitations/implications – This rese...

Sustainable development as a framework for developing country participation in international climate change policies

Abstract: The paper presents a number of ideas on how climate change policy implementation in developing countries can be supported by alternative international cooperation mechanisms that are based on stakeholder interests and policy priorities including broader economic and social development issues. It includes a brief review of current development policies, technological research and promotion efforts, and climate change that demonstrates that mutual policy initiatives undertaken by governments and the private sector actually have major positive impacts on climate change without being initiated by this global policy concern. Furthermore a number of examples are given on how future development objectives in Brazil, China, and India jointly can support economic and social goals and global climate change concerns if these goals are taken into consideration and supported by international cooperative mechanisms. The paper proposes international cooperative mechanisms that can support the implementation of integrated development and climate change policies. The mechanisms include an international sustainable development (SD) and Climate Finance Mechanism (SDCFM), technology development and transition programmes, technology standards, and other measures.

Determinants of IPO Underpricing in the National Stock Exchange of India

Abstract: The National Stock Exchange (NSE) is India's first fully demutualized stock exchange. It is also the largest exchange in India in terms of volumes in both equity and derivatives segments. The previous studies on Initial Public Offerings (IPOs) in India have been largely confined to the Bombay Stock Exchange (BSE). This study looks at the pricing of IPOs in the NSE. In particular, it seeks to empirically explain the first day under pricing in terms of the demand generated during the book building of the issue, the listing delay between the closure of the book building and the first day listing of the issue and the money spent on the marketing of the IPO by the firms. It also seeks to understand any emerging patterns in Indian IPO market with reference to the previous studies. Moreover it seeks to find the post IPO returns for one month in the NSE. The results suggest that the demand generated for an issue during book building and the listing delay positively impact the first day under pricing whereas the effect of money spent on the marketing of the IPO is insignificant. We also find that in consonance with extant literature, the post IPO performance in one month after the listing for the firms under study is negative.

From climate change impacts to adaptation : A development perspective for India

Abstract: India has good reasons to be concerned about climate change as it could adversely affect the achievement of vital national development goals related to socio-economic development, human welfare, health, energy availability and use, and infrastructure. The paper attempts to develop a framework for integrated impact assessment and adaptation responses, using a recently built railroad coastal infrastructure asset in India as an example. The framework links climate change variables - temperature, rainfall, sea level rise, extreme events, and other secondary variables - and sustainable development variables - technology, institutions, economic, and other policies. The study indicates that sustainable development variables generally reduce the adverse impacts on the system due to climate change alone, except when they are inadequately applied. The paper concludes that development is a vital variable for integrated impact assessment. Well crafted developmental policies could result in a less-GHG intensive future, enhanced adaptive capacities of communities and systems, and lower impacts due to climate change.

The market reaction to stock splits — evidence from india

Abstract: Stock splits are a relatively new phenomenon in the Indian context. This paper examines the market effect of stock splits on stock price, return, volatility, and trading volume around the split ex-dates for a sample of stock splits undertaken in the Indian stock market over the period 1999–2005. The traditional view of stock splits as cosmetic transactions that simply divide the same pie into more slices is inconsistent with the significant wealth effect associated with the announcement of a stock split. However, the empirical evidence confirms a negative effect on price and return of stock splits. The overall cumulative abnormal returns after the split are negative. These results suggest that stock splits have induced the market to revise its optimistic valuation about future firm performance, rejecting signaling hypothesis to which splits convey positive information to markets. Hence, stock splits have reduced the wealth of the shareholders. The results also show that presence of a positive effect on volatility and trading volume following the split events, thus suggesting that split events enhance liquidity.

Technical Call Centres: Beyond 'Electronic Sweatshops' and 'Assembly Lines in the Head'

Abstract: Views on call centres as work systems represent a dichotomy. While, on the one hand, call centres are seen as conforming to an engineering or mass service model, on the other hand, they are described as high commitment service organizations. Technical call centres, studied as part of a larger qualitative study on experiences of working in call centres, back offices and medical transcription in Mumbai and Bangalore, India, were found to resemble high commitment service organizations. Task complexity, variety and autonomy were distinguishing factors in technical call centre jobs, the presence of which promoted employee well-being and satisfaction. At the same time, the emotional labour required by front-line service work remained an important part of the job profile. The emergence of cross-cultural interactions in call centre work, stemming from the contemporary outsourcing trend, is highlighted.

Detecting Data Flow Errors in Workflows: A Systematic Graph Traversal Approach

Abstract: When designing a workflow, it is customary practice to create the control flow structure first and to ensure its correctness Information about the flow of data is introduced subsequently into the workflow and its correctness is independently verified Improper specification of data requirements of tasks and XOR splits can cause problems such as wrong branching at XOR splits and the failure of tasks to execute Here we present a graph traversal algorithm called GTforDF for detecting data flow errors in a workflow that is free of control flow errors, and illustrate its operation on two realistic workflows with interconnected loops Our approach extends and generalizes data flow verification methods that have been recently proposed It also makes use of the concept of corresponding pairs lately introduced in control-flow verification It thus has the potential for development into a unified algorithmic procedure for the concurrent detection of control flow and data flow errors

Performance of Indian Equity Mutual Funds vis-a vis Their Style Benchmarks: An Empirical Exploration

Abstract: In this paper we did a return based style analysis of equity mutual funds in India using quadratic optimization of an asset class factor model proposed by William Sharpe. We found the 'style benchmarks' of each of our sample of equity funds as optimum exposure to eleven passive asset class indexes. We also analyzed the relative performance of the funds with respect to their style benchmarks. Our results show that the funds have not been able to beat their style benchmarks on the average.

Information Technology Adoption and the Role of Organizational Readiness: The Case of an Indian Bank

Abstract: This case describes the evolution of the use of information technology (IT) at National Banking Services, one of the oldest banks in India. It describes the bank’s response to economic liberalization and the resulting initiatives for IT adoption. It highlights the influence of organizational readiness on IT adoption. In particular, it describes the negative influence on IT adoption of conditions such as the lack of top management support, skeptical end-user attitudes about the benefits of IT, and resistance from employee unions. The case ends with a description of the changing role of IT in the banking industry in India and the challenges confronting the bank.

Issues and Concerns in the Implementation and Maintenance of HRIS

Abstract: This article looks at the issues and concerns faced by nine Indian organisations in implementing and managing Human Resource Information Systems (HRIS). The organisations are diverse in terms of size and sector that they belong. The critical success factors and weaknesses in various stages of implementing an HRIS are explored in this paper. The problems are rooted in mainly two factors. One is the fact that the HR department lacks knowledge about HRIS and hence is not able to clearly elucidate the requirements of the system. Poor need assessment is a continuation of this problem. Second is the lack of importance given to the HR department in the organisations.The spectrum of cases covered shows the clear variation in terms of the success of implementation. In poorly managed implementations, the potential of HRIS has been under-utilised. Only a few modules have been implemented and at best HRIS's role is that of a centralised database. Very high dependence is placed on the vendors without having a clear id...

Role of Trade and Macroeconomic Policies in the Performance of Special Economic Zones (SEZS)

Abstract: Special economic zones following the enormous success of China have been widely imitated. But it is to be entirely anticipated that the results would vary greatly. Earlier avatars of SEZs in the form of Foreign Trade Zones (FTZs) and Export Promotion Zones (EPZs) were important in the export led growth of east Asia especially South Korea. But more than SEZs or EPZs per se it is the pursuit of “export led growth policies” which underlie the success of exporting and hence of SEZs. SEZz / EPZs can be seen as a (not necessary) microeconomic and spatial initiative in the pursuit of ELG under rather special circumstances by China, and South Korea and Taiwan to more limited extent in their early phases of transformation. In other countries not pursuing ELG the success of SEZs/EPZs has been rather modest. The roles played by the SEZs/ EPZs etc whatever their original purpose were constrained and determined by the macroeconomic policies, trade policies, and regional alignments. There is little meaning in studying SEZs beyond their layout and design without reference to these broader trade and macroeconomic policies. Thus early pioneers line India could make little out of their EPZs since the policies severely biased against exports. We characterise export led growth (ELG) as the strategy that has allowed the late twentieth century industrialisations, which is far from both import substitution (as conventionally understood) and laissez faire, and to be the simultaneous pursuit of both IS and EP. With this framework we are able to understand the role and evolution of SEZs in a wide variety of countries. These help us to explain and anticipate that unless the policy turns sharply to favours exports (more correctly tradables over non tradables) the success of Indian SEZs would be modest and nowhere near that registered in China. Following from our characterisation of Import Substitution, Export Led Growth and Laissez Faire we also bring out the nature and performance of “special zones” when these are promoted under the very same regimes.

A GIS approach to plan and deliver healthcare services to urban poor: A public private partnership model for Ahmedabad City, India

Abstract: Purpose – To provide a public private partnership (PPP) model for urban health centres (UHC) in developing countries that can be useful for urban local governments and private service providers willing to enter into meaningful partnerships so as to improve primary healthcare services.Design/methodology/approach – This research is based on geographical information system methodology to identify suitable locations to address availability, access, affordability and equity concerns and to provide a practical framework for PPP for establishing UHC. The methodology involved survey and mapping of slum communities and private healthcare facilities.Findings – The research provides intricate details about planning healthcare services for urban poor, operational and managerial aspects of service provision and processes involved in PPP for urban health.Research limitations/implications – The model is developed and tested for Ahmedabad city (sixth largest city in India) and may need a certain amount of customisation f...

The economic function in the Hindu worldview: its perennial social relevance

Abstract: Purpose – Among the several sub‐themes for this Special Issue this paper aims to deal, broadly, with the Hindu view of economics and allied matters.Design/methodology/approach – The approach is a conceptual one that highlights a few crucial aspects of the “positive” flank of Hinduism vis‐a‐vis its “normative” dimension. Researchers, thinkers, scholars and, above all, some important but ignored realizers of Hindu psycho‐philosophy, have been dug into for materials comprising the paper.Findings – The findings clearly show that the amazing sustainability of Bharat's (i.e. India's) socio‐economic processes, structures and systems, despite the tortures of history visiting her, can be explained by her abiding fidelity to the eternal as the basis of the temporal. This is the very foundation of the sacro‐secular character of Hindu culture.Practical implications – The expected impact is long‐term through deep‐structure germination on a wide tract. Hurried practical application in tiny fractions is not intended as ...

Analysis of risk and returns: a study of Indian industrial sectors

Abstract: This study aims at analysing risk and returns of different sectors of the Indian economy using both the market and accounting based information. The results based on market information show that Fast Moving Consumer Goods (FMCG), healthcare and oil and gas sectors are the most defensive sectors of the Indian economy whereas metal and Information Technology (IT) sectors are the most aggressive sectors of the Indian economy. They further show that macroeconomic factors explain the highest percentage of total absolute risk of metal, auto and capital goods sectors whereas sector specific factors explain the highest percentage of total risk of the FMCG sector. Moreover, the results indicate that market risk for different sectors of the Indian economy has not been stable over time. The results based on accounting information suggest that FMCG, metal and IT sectors are having the highest business risk whereas sectors like technology, auto and public sector units are having the least business risk. The results based on accounting information further prove that consumer durables and metal sectors are having the highest financial risk whereas FMCG, healthcare, IT and oil and gas sectors are having the least financial risk. Regarding the association of market and accounting based measures of risk, the results demonstrate that the entire risk computed on the basis of accounting information is not significantly captured by the market. It is only the financial risk which is significantly captured by the market.

A Heuristic Technique for Solving Dual-Homing Assignment Problem of 2.5G Cellular Networks

Abstract: 2.5 cellular network topology involves grouping of NodeBs into Radio Network Controllers (RNCs), RNCs into serving GPRS support nodes (SGSNs), and RNCs into mobile switching centres (MSCs), so as to minimize the total cost of operation (TCO) including equipment cost, cable cost, installation cost, cost of call setup and handoff cost. The problem has been traditionally solved under single-homing consideration with an objective to reduce the TCO over a certain period of time. However, a single homing solution may not be effective with a group of subscribers having a specific diurnal pattern of their inter-SGSN mobility. In this scenario dual-homing of RNCs may be one of the approaches to reduce the TCO. In this paper, we have addressed the problem by making RNCs dual-homed. The problem is formulated as a combinatorial optimization problem and solved using a heuristic technique. The performance of the heuristic technique is compared with an exhaustive search technique for small size problems and it is found that the proposed technique is capable of finding a good quality solutions

Human Resource Accounting - A New Dimension

Abstract: Human resource accounting (HRA) is an attempt to identify, quantify and report investment made in Human resources of an organization that are not presently accounted for under conventional accounting practice. Businesses which require a considerable creativity or are science-based show a significant difference between market value and net book value. This difference is for intangible assets (including human skills). However the Human Resources are yet to get recognition in Balance Sheet. Businesses are not properly accounting for it in Books of Accounts. Auditor certifies in his report that balance sheet shows true position of business in spite of the fact that it is not showing the value of human resources. Researches in this field have been slow and researchers are not able to develop a model which are free from major limitations. Major limitation of existing models is that they are not able to identify two effects on Human Capital creation which is back bone of accounting. In this article I have discussed efforts done in this field by researchers and proposed a model for valuation and accounting of Human resources. This proposed model is not altogether new model but it is an extension of Lev and Schwartz Model (L&S) because at one point it uses Lev & Schwartz Valuation principles. It also remove major weakness of L&S model such as it is able to account for Human Resource in balance-sheet. This model also encourages employee to achieve high level of performance.