Vol. 7, No.2, June 2023, 7-13
Received: 25.04.2023, Accepted: 23.06.2023
Centralisation of cash management: still advisable?
Authors:
Christian BARTSCH
IU Internationale Hochschule, Munich, Germany
Wim WESTERMAN
Rijksuniversiteit Groningen, Groningen, The Netherlands
Aim: This article builds upon recent evidence that centralisation of cash management activities, often advocated by enthusiast protagonists from the academic, corporate and consultancy world, has given way to decentralisation thereof. The aim of the article is to underpin the idea that such moves may be good.
Research design: The article provides an historical overview on the centralisation starting in the 1980s, stagnating later on and reversing recently, not just for reasons of political tensions and pandemic reasons.
Findings: There are structural reasons for firms being more critical on centralisation of cash management, including still lasting limits to its implementation and recent changes in the corporate and finance sectors.
Originality: The present study argues that firms may rightfully decentralise the cash management, while also making clear to there are no “one fits all” solutions to the issue.
Implications: Firms may want to overthink the organisation of their cash management in the light of new developments. Follow-up research in terms of case studies and surveys may help to further guide them.
Keywords: cash management, (de-) centralisation, role of banks
JEL: B27, G20, L23
Vol. 7, No.2, June 2023, 15-39
Received: 29.04.2023, Revised: 04.06.2023, Accepted: 08.06.2023
Does audit committee matter? Evidence from Tanzanian listed firms
Author:
Bernard MNZAVA
Institute of Finance Management (IFM), Tanzania
Aim: The primary role of audit committees is to provide oversight in the financial reporting, audit process, internal controls and in compliance with regulations and laws. The objective of this paper is to investigate the impact of board audit committees attributes on firm performance.
Design/Research methods: Using a sample of firms publicly traded on the Dar es Salaam Stock Exchange (DSE) during 1998–2018; this paper estimated fixed effects regressions to tests the hypotheses developed.
Conclusions/findings: The results show that audit committee attributes are positively linked with firm financial performance. Specifically, the findings reveal that audit committee attributes as measured by audit committee meetings, existence of audit committees, audit committee size and audit committee independence have positive impact on corporate performance as measured by return on sales (ROS) and profitability. These findings confirmed that firms having audit committees performed better than those without audit committees.
Originality/value of the article: There is scarce research which examines the link between audit committees and firm performance in developing countries. To date, there is no study that has investigated the relationship between audit committee characteristics and firm performance in Tanzania. This paper provides new evidence on the relationship between audit committee attributes and firm performance in Tanzanian environment.
Implications of the research: Overall, the findings recommend existence of large independent audit committees which conducts their meetings regularly as it is ideally enhances firm financial performance.
Keywords: Audit committee attributes, corporate governance, firm performance, Tanzania
JEL: G3, N27
Vol. 7, No.2, June 2023, 41-66
Received: 23.06.2023, Accepted: 23.06.2023
Financial markets as a public good – complexity and the sustainability of financial markets 1
Authors:
Johannes (Joost) PLATJE (corresponding author),
WSB Merito University Wrocław, Poland
Herman W. HOEN,
Rijksuniversiteit Groningen, The Netherlands
Luis RENTERIA GUERRERO
Universidad de Sonora, Hermosillo, México
Francisco VARGAS
Universidad de Sonora, Hermosillo, México
Aim: In this paper, it is argued that in complex financial systems private goods, important for the creation of a market, have to be considered in a multiple of differing property rights structures necessary for the functioning of the system. This may lead to high transaction costs and adverse incentives for different players, threatening the sustainability of the system. The aim of the article is to create and explore a framework for assessing fragilities and threats to the sustainability of financial markets, using a property rights approach. This may be a useful background for development of policy to increase the sustainability of financial markets.
Conclusions/findings: It is argued that while financial services have features of a private good for which markets exist, the infrastructure and organizational structures have features of a club good. These are characterized by problems of congestion and depreciation due to its overuse. The question is addressed to what extent the public good features are of the “weakest-link” kind, where fragilities may lead a potential collapse.
Implications of the research: The complex financial system should be prevented from getting too many features of an open access regime, while making it a self-strengthening system where failures have learning effects. This may require the increase of different types of buffers and limits to the size of the players in the financial system. Otherwise, any action that is thought to lead to an improvement, is likely to lead to have the opposite effect.
Keywords: financial markets, complexity, public goods, club goods, property rights, sustainability
JEL: D23, E42, G1, G2
1 We are indebted to Jan Kakes from De Neterlandse Bank for useful comments on earlier versions of this article. Of course, any mistakes remain the sole responsibility of the authors.