Corporate Financial Executives Research Articles

Outsourcing and offshore outsourcing of information technology in major corporations

Purpose – The purpose of this paper is to explore the views of top corporate financial executives on the success of implementation of systems outsourcing and offshore outsourcing, as well as the variables associated with success in these areas.Design/methodology/approach – An analysis of secondary data obtained from the Financial Executives International comprehensive survey‐based research on technology issues for financial executives. Regression analysis and other statistical methods are used.Findings – The study examined usage of outsourcing and offshore outsourcing from the top financial executive's perspective. Only 30 percent of the surveyed companies outsourced IT and only 25 percent engaged in offshore outsourcing IT. Size of the company did significantly influence usage. The major motivators behind the decision to pursue outsourcing were the views that IT is not a core competency and that significant cost reduction was possible. The experiences of the organizations surveyed reflect a general satis...

Hotel management company forecasting and budgeting practices: a survey‐based analysis

PurposeThe purpose of this study is to investigate and document current US hotel management company practices in budgeting and forecasting, and to recommend a process to improve accuracy and efficiency.Design/methodology/approachKey corporate financial executives of hotel management companies operating in the USA were surveyed. Different from prior studies that surveyed the US property‐level managers, or European hotel operators, the study surveyed the authors of budget guidelines of US hotel management companies with at least ten units or 1,000 rooms, to discover and document the budgeting and forecasting practices of multi‐unit hotel management companies. Chi‐square and t‐tests for equality of means were used to identify the differences between large and small hotel management companies.FindingsMany concepts were identified that are not found in hospitality management textbooks. Current budgeting and forecasting methods used in the industry present opportunities for improving accuracy. There are also opportunities for time efficiencies, which may lead to improved participant satisfaction. Some significant differences were identified in budgeting and forecasting processes between large and small management companies.Research limitations/implicationsThe findings may not apply to independently owned and operated hotels, or small hotel management companies. Future research may focus on identifying economic factors that most influence hotel revenues at the local or regional level. Also, future research may focus on corporate computer software that facilitates intranet consolidation of property level budgets and forecasts and also allows spreadsheet flexibility for exploring various scenarios.Practical implicationsThe practical application of the study is the recommendation for a centralized budget process that enhances accuracy, improves efficiency, and reduces “gamesmanship”.Original/valueThere are four main contributions of the study: the obtaining of inputs from corporate officers of hotel management companies with operations in the USA; the documenting of forecasting and budgeting practices of hotel management companies operating in the USA; the recommending of a forecasting and budgeting process that may improve accuracy and participant satisfaction; and the identifying of differences between large and small companies in relation to forecasting and budgeting practices.

Enterprise resource planning success

Purpose – To explore the views of top corporate financial executives on the success of implementation of enterprise resource planning (ERP) systems as well as the variables associated with ERP project success. Specifically, relationships between dependent variables cost and budget performance on the independent variable overall project success are studied. Variables influencing cost and time performance are also explored.Design/methodology/approach – An analysis of secondary data obtained from the 2003 financial executives international comprehensive survey‐based research on technology issues for financial executives. Multiple regression analysis and other statistical methods are used.Findings – The findings indicate that ERP implementations are generally viewed as moderately successful by top financial executives. In addition, both cost and time were significantly correlated with an overall view of success with cost performance holding higher influence. Several variables were found to significantly corre...

Does the “management approach” contribute to segment reporting transparency?

Segment reporting creates an opportunity for companies to add value to the information they disseminate about their industry and geographic operations. This article examines the “management approach” to segment reporting from a user perspective that should be of great interest to corporate financial executives. The management approach to segment reporting requires companies to report segment financial information consistent with the way they manage their businesses. We conclude that, despite more segment data being reported, the potential of the new management approach to significantly benefit users is compromised by uneven compliance among reporting companies. The complicity of external auditors in compliance shortcomings should concern all stakeholders in the financial reporting process. Noting two high-profile examples of accounting fraud, we comment on how the management approach sheds light on Enron's operations, while WorldCom concealed important segment information due to probable auditor malfeasance.

Implications for Asset Allocation, Portfolio Management, and Future Research II

fter everything that has been said today, it is a challenge to make a unique contribution. We have heard how difficult it is to get a measure of expectations in terms of the equity risk premium, and what I am going to present is an approach to measuring expectations that is different from those that have been discussed. For the past five years, John Graham and I, in conjunction with Financial Executives International, have been conducting a survey of chief financial officers of U.S. corporations about their estimates of future equity risk premiums and volatility.1 Beginning in the second quarter of 2000 and, so far, extending into the third quarter of 2001, we have analyzed the more than 1,200 responses from the CFOs. Only 6 observations will appear in the graphs, but each observation is based on approximately 200 observations. We know from other surveys that have been done that CFOs do actually think about the risk premium problem. We know that 75 percent of corporate financial executives—treasurers and CFOs—admit to using a CAPM-like or multifactor model. Therefore, we believe that the CFOs we are surveying are a reasonable sample of the population to question about the equity risk premium. I believe it is a sample group superior to that of economists surveyed—for example, by the Federal Reserve Bank of Philadelphia. The Philadelphia Fed’s survey contains unreliable data (which I know from directly examining these data). I also think our survey has advantages over the survey of financial economists reported by Ivo Welch (2000) because our respondents are making real investment decisions. Finally, it is well known that the forecasts by financial analysts are biased. So, the survey we are conducting should provide some benefit in our search for ex ante risk premiums.

The enigma of the Greek auditing profession: some preliminary results concerning the impact of liberalization on auditor behaviour

The paper reports the results of a survey of the perceptions of individual auditors and corporate financial executives in Greece, regarding changes in emphases which auditors gave to various audit functions following the liberalization of the Greek auditing profession in 1992. The term ‘liberalization’ is used here to denote the introduction of competition in the market for statutory audits and the concomitant economic dependence of auditors on audited companies. The liberalization was effected through legislation and was the result of a long and intense intra-professional conflict between a group of indigenous auditors who until then enjoyed legal monopoly of practice and local branches of international accounting firms who wanted to enter the market for statutory audit services. The survey results suggest that following the liberalization, significantly more emphasis was placed by auditors on the provision of Management Advisory Services to audited companies. In relation to functions which are typically performed by auditors in order to form a professional opinion on corporate financial statements the survey revealed a large divergence in the perceptions of respondent groups.

Investing in Eastern Europe: Perspectives of chief financial officers

AbstractThis study surveyed senior corporate financial executives to determine their views on Eastern European business opportunities. Responses cover a broad range of topics and provide new insight into their perceptions and experiences about key factors that influence investment decisions: expected profitability, risk, resources, and timing. An optimistic view emerged. This is noteworthy in light of the reputation of CFOs for caution, conservatism, and reticence. Their perception of a favorable return‐risk ratio may serve as further encouragement for those considering Eastern European ventures. © 1993 John Wiley & Sons, Inc.

Financial Reporting for Common Stock Investment Decisions

In 1970, the National Association of Accountants published the results of a study consisting of a series of depth interviews conducted under the direction of Morton Backer.' These interviews represented an attempt to elicit information from securities analysts, loan officers of commerical banks, and corporate financial executives concerning the kinds of information required in the making of investment and credit decisions. The purpose of the study was to identify possible improvements in financial reporting by relating the responses of the interviewees to current reporting practices. The results of the study are highly significant for the accounting profession. The majority of interviewees, for example, expressed continued support for conservatism in accounting reports, and were most concerned about diversity in accounting procedures.2 Both securities analysts and commercial bankers, however, were strongly opposed to the recasting of financial statements to reflect general and specific price changes.3 The purpose of this article is to test the validity of analysts' opposition. The author will evaluate the outputs resulting from various reporting methods on the basis of their usefulness in valuing common stock and then compare the results of this evaluation with the responses of the interviewees participating in the NAA study. Hopefully, this last step will provide a basis

Plant Financing in a War Economy

AS THE nation turned its attention to the problem of national defense in the summer of I940, the rising tide of government orders made it necessary for corporate financial executives to consider, first, in what ways working capital might be secured to finance the production of larger physical volumes of goods from existing facilities under rising-cost conditions, and, second, the extent to which new plant should be constructed and the methods whereby these facilities should be financed when present capital equipment was incapable of satisfying the demands of government procurement agencies. It is the purpose of this article to consider the latter of these two problems-the problem of new facility financing. Attention will be devoted first to an account of the extent to which plant facilities have increased, followed by an analysis of financing methods with an attempt to evaluate the effect of these financing methods upon the capital structures and policies of business concerns and upon the relationships between business and government.2