Measurement Of Transaction Costs Research Articles

DIVERSIFICATION AND COORDINATION IN AGRICULTURAL COOPERATIVES: STUDY PROPOSAL

Agricultural cooperatives have diversified their businesses in response to economic, financial and political changes. Despite its economic and social importance and its distinct organizational characteristics, few studies address diversification in cooperatives. When diversifying, new activities require the cooperative and members to adapt to the demands of end markets, emphasizing vertical coordination and focusing on business terms. In addition, the cooperative begins to coordinate several production chains with the member. As a result, some doubts arise regarding the efficiency of the cooperatives' governance structure for these activities and the impact on other associated activities. With this, the objective was to present a study proposal aiming to identify how the diversification strategies adopted in agricultural cooperatives relate to the governance structure and what the consequences are for other existing exchange relationships. To this end, a theoretical discussion was held according to the complementarity of Transaction Cost Economics (ECT) and Measurement Cost Economics (ECM), with the support of a bibliographical survey on the diversification strategy in cooperatives and the relationship with members.

Improved Hedge Fund Portfolio Optimization Using 2-Step Covariance Matrix and Fund Transaction Costs

This study focuses on fund portfolio investments in the Chinese market. The application of classic portfolio optimization methods encounters several issues when applied to fund portfolios. For example, issues such as the non-normal distribution of returns on funds or fund portfolios, turnover rate limitations in fund investments, and liquidity constraints of fund assets, which can lead to transaction costs and opportunity costs, are prevalent challenges. The existence of these issues can compromise the effectiveness of classic portfolio optimization methods like Mean-Variance Optimization. This may result in a reduction of accuracy in determining the portfolios optimal weights, a deviation of actual trading results from the models optimal expectation, and may even render the optimal weights impractical in real-world scenarios. To address these challenges, this paper integrates the 2-Step covariance matrix method (2-Step method) and the measurement of fund transaction costs into the portfolio optimization process. The paper finds that the 2-Step method, compared to the baseline, can indeed improve the risk-return indicators of the potimal fund portfolio. The inclusion of the transaction cost can effectively control the turnover frequency of the portfolio. Even after accounting for these costs, the 2-Step method continues to exhibit a significant improvement effect compared to the baseline.

Information acquisition costs and credit spreads

This paper investigates the relevance of information acquisition costs for corporate bond spreads. We exploit the staggered introduction of the SEC’s EDGAR database and its XBRL initiative to show that these costs matter: Lower information acquisition costs are associated with a decline in credit spreads at the onset of both initiatives. Our results are stronger for bonds that are associated with higher information uncertainty. We also show that bond liquidity is an important channel through which lowering information acquisition costs affects credit spreads. We document a decline in the non-default component in spreads and a positive impact on transaction cost measures and trading volume following the introduction of XBRL.

Mecanismos de proteção de direitos de propriedade no sistema agroindustrial do leite: Um estudo no Paraná, Brasil, e na antiga Midi-Pyrénées, França

Abstract Purpose: This study aims to understand the mechanisms of property rights guarantee in the dairy agro-industrial system (DAGS) in Paraná, Brazil, and in the old Midi-Pyrénées region, France. Originality/value: From a complementary perspective of Transaction Cost Theory and Measurement Cost Theory, the proposal in the study is that the use of mechanisms to guarantee property rights through safeguards, parameters, measurement, agreements, or litigation contributes to the transaction of differentiated products and also to the protection of these rights, favoring systems improvement. Design/method/approach: A descriptive qualitative study was done, encompassing 25 semi-structured interviews with producers, processors, and key agents of the DAGS in the state of Paraná in Brazil and in the old Midi-Pyrénées region of France, in 2016 and 2017. Qualitative content analysis was performed with NVivo Pro software. Findings: It was identified that in France and in the central-eastern and western regions of Paraná, the use of complementary protection property rights mechanisms (safeguards, parameters, measurement, agreements, or litigation) allows higher quality milk transactions and reinvestments in production by agents, contributing to system improvement. In the northern region of Paraná, the limited use of property rights mechanisms (verbal agreement, measurement, unreliable information sharing, and the absence of ex post protection) allows minimal quality milk trans actions and restricts reinvestments in production, limiting systems improvement.

Forensic Delay Analysis as Evidence of Transaction Costs in Construction Projects

Construction projects are characterised by supply chains with multiple contracts and significant transaction costs. An example of these costs is to be found in the management of project delays. The operationalisation and measurement of transaction costs, especially in the construction context, has hitherto proved difficult. The work reported here is concerned with defining and measuring the resources required for the management of contractual disputes relating to project delays. Its main argument is that concepts from transaction cost economics (TCE) theory (bounded rationality, uncertainty, information asymmetry, and opportunistic behaviour) present serious problems for transaction efficiency. This is exemplified in forensic analysis of construction project delays. Data from twelve case studies are analysed, to reveal that up to 90% of time spent on delay analysis was concerned with searching for and validating information which could, ostensibly, be automatically and reliably captured using digital technologies. This research forms part of a wider study that considers the implications of the identified inefficiencies and makes a case for the exploitation of advances in information technology on the more efficient resolution (or even avoidance) of contractual disputes. It concludes that there is a prima facie case for this, and therefore for the reduction in the transaction costs that relate to the management of construction project delays.

Neither market nor hierarchy—coordination costs in the allocation of track capacity in the Swedish railway network

AbstractTransaction costs have been an issue since the advent of the deregulation of the European railway markets in the 1990s. Transaction cost economics received renewed attention in research on the deregulated railway markets in the EU after the publications of two influential reports in the early 2010s.In this article, we develop a model that enables classification and measurement of transaction costs and other coordination costs in deregulated markets. This model is then used to analyze the costs of path allocation in the Swedish railway sector and to compare the results with findings in previous research. We also discuss the economic rationale of the distribution of coordination costs among the involved parties.Our key empirical findings are that the total coordination costs in the Swedish market‐mimicking path allocation process are as low as or lower than the most cost‐efficient market coordination processes studied in railway markets, and that the state administrations take on nearly all the coordination costs in order to minimize the effects of opportunism, rent‐seeking and information impactedness. Another finding is that the size of the coordination costs found by different studies seems to be dependent on whether a bottom‐up or a top‐down approach is used.

Determinants Factors of Digital Financial Services Adoption and Usage Level: Empirical Evidence from Ghana

Digital Financial Services (DFS) have the potential to benefit people in poverty in developing economies significantly. DFS provides a variety of economical, convenient, and secure financial services. However, the DFS adoption rate is slow in Ghana due to being over-reliant on personal cash delivery. Substantial variation in adoption levels across important socio-demographic characteristics is another factor. Using a representative national dataset from Ghana, this study explored digital financial services adoption determinants. It quantified the role played by each of the six incorporating factors and controlled four socio-demographic characteristics. The work also assessed the adoption level among key socio-demographic groups. The determinants of DFS are estimated using logit specification, and average marginal effects are computed. The logit model indicated that effort expectancy, awareness, facilitating conditions, transaction cost, security and privacy, and self-efficacy positively influence DFS adoption and increase DFS adoption by 0.7%, 2.3%, 28.5%, 3%, 2.1%, and 2.4%, respectively. Additionally, the results indicated a significant disparity in adoption levels across key socio-demographic variables, including education level, gender, urban and rural residence, and administrative regions of Ghana. Given the substantial influence of facilitating conditions and transaction costs on DFS adoption, we argue that it would be advisable to incorporate digital infrastructure development and lower transaction cost measures into the planning of any intervention.

Governance structures in cooperative slaughterhouses: a study on the chain of differentiated beef in the state of Paraná

Abstract: This study sought to discuss the governance structures adopted between livestock producers and their cooperative slaughterhouses in the chain of differentiated beef in the state of Paraná. The theoretical basis used was the Transaction Cost Economics and Measurement Costs Economics, complemented by the specificities of cooperatives. We conducted interviews with three key agents and eleven representatives of six cooperative slaughterhouses operating in this system. As result, we observed that the cooperatives have similar objectives and requirements, although there are differences in the levels of formality or flexibility. Although transactions are recurrent and have been successful, they involve a high asset specificity, depend on subjective measurements, and are still exposed to market uncertainties, which leaves room for the generation of conflicts and disincentives to quality. Despite this, the relational and reputational aspects associated with trust and partnership between the parties are elements that enable reduced transaction and measurement costs in these structures. At first, the measurements conducted by the cooperatives had an important role in the construction of trust between the parties and for value distribution. In a second moment, the trust built enabled the reduction of measurement costs.

Property rights and reputation in the dairy agro-industrial system

Purpose The purpose of this study is to understand the effect of governance structure alignment, property rights protection, and reputation in generating efficiency in dairy agro-industrial system in Paraná, Brazil, and Midi-Pyrénées, France. Design/methodology/approach Descriptive qualitative research, comprising semi-structured interviews with producers, processors and key agents of the dairy agrindustrial system in Brazil and France, in 2016/2017. Findings As a result, it was identified that measurement generates information about transacted dimensions and when it is shared can generate affect reputation in transactions that leads to system improvement. It was also observed that, in the dairy agro-industrial system, reputation acquired does not reduce all the measurement costs, as the product requires measurement in each all collection, regardless of the reputation created. Research limitations/implications As a limitation of the study, there is a difference in the moments when the interviews were done. In 2016, in France, the context was low prices, while in 2017, in Brazil, there was a rise in prices. This difference could have influenced some responses to the interviews, mainly about efficiency by producers. Practical implications Reputation, protecion of property rights by measurement and information sharing allows reduction costs (transaction, measurement and negotiation costs). This efficiency implies improvement to the system, in cases of milk producers and processors. Social implications Improvements in the dairy system can have repercussions on several other improvements such as better distribution of income among agents in the chain; better-paid producers, which implies the improving quality of lives of these people; better products offered to consumers. Originality/value From a complementary perspective of transaction cost economics and measurement cost economics, reputation and protection of property rights are discussed with a focus on efficiency. Empirically, the paper contains heterogeneous data collected from two countries: Brasil and France.

Проблеми виявлення та аналізу трансакційних витрат на рівні суб’єкта господарювання

The article is aimed at identifying and analyzing transaction costs when making management decisions at the level of an economic entity. In the course of the research, the following methods were used: grouping – in determining the main forms of transaction costs based on existing classifications; generalization – when systematizing information on the identification of approaches to the assessment and measurement of transaction costs; structural and logical – to determine the place of transaction costs in the structure of the enterprise’s costs; analysis and synthesis – to substantiate the recommendations for displaying information on the level of transaction costs at the enterprise in financial statements. The main forms of transaction costs on the basis of existing classifications are researched. Information on identification of approaches to valuation and measurement of transaction costs is systematized. The place of transaction costs in the structure of the enterprise’s expenses is determined. Recommendations on displaying information on transaction costs at the enterprise in the financial statements on the basis of their occurrence in a certain sphere of activity of the market entity (transaction costs of operational, financial, investment activities) are substantiated, which represents the scientific novelty of the research. It is concluded that the institutional approach, in particular application of the theory of transaction costs before their valuation and preparation of financial statements, allows not only identifying possible solutions to existing problems in accounting theory and practice, but also seting fundamentally new tasks that require non-standard solutions. The practical significance of the obtained research results is to determine the impact of transaction costs on the efficiency of the functioning of market entities and substantiate recommendations for displaying information about their level at the enterprise in financial statements.

Coordenação em sistemas agroindustriais da pecuária bovina de corte no Brasil: uma caracterização bibliográfica

Dada importância do sistema agroindustrial da pecuária bovina de corte no Brasil, a existência de falhas de coordenação entre os agentes e a emergência de sistemas diferenciados, buscou-se neste artigo compreender, os mecanismos de governança adotados nos sistemas agroindustriais convencionais e diferenciados da pecuária bovina de corte no Brasil. A presente pesquisa, qualitativa e descritiva, envolveu pesquisa bibliográfica e foi fundamentada na Economia dos Custos de Transação e na Economia dos Custos de Mensuração. Os resultados apontam que o sistema convencional é caracterizado por baixa especificidade de ativos, elevada incerteza e baixa frequência; e dimensões facilmente mensuráveis, sendo transacionados via mercado spot. Os sistemas diferenciados possuem maior especificidade de ativo, incerteza e recorrência das transações; bem como dimensões que são difíceis de serem mensuradas. Nesse caso, não há um consenso quanto aos mecanismos de coordenação adotados. Encontrou-se de formas híbridas envolvendo relações de longo prazo, mecanismos formais e informais e uso de certificação por terceira parte, até integração vertical. Entretanto, verificou-se que falhas perduram tanto nos sistemas convencionais e diferenciados, principalmente associadas ao comportamento oportunista por parte dos agentes. Conclui-se que apesar dos esforços, perduram as falhas de coordenação nesses sistemas, podendo comprometer a continuidade dos mesmos.

Company government in a context of environmental uncertainty: institutional aspect

Growth of uncertainty of the external environment, transition to a post-industrial phase of development caused aggravation of a problem in planning of economic activity of firm. The main result of the study was a combination of non-institutional and resource theories to explain the phenomenon of formation and development of network business structures and the firm as a whole. The integration of these theories has been made possible by an in-depth analysis of such transaction attributes as uncertainty and the introduction into scientific circulation of the concept of «valuation» of assets as one of the key attributes of transactions. Network business structures are a separate, distinct from the market and hierarchy, a form of contractual arrangement for transactions, rather than a «mixed», «hybrid» or «transitional» structure on the Market-Hierarchy continuum, as interpreted by the current new institutional theory firms. An example of such a situation is the gradual formation of more predictable and clear external institutional conditions of economic activity. In other words, the interval e1-e2 is the time for further decision-making by transaction participants to transfer transactions to a market or hierarchical management mechanism or further interaction in a network of business structures. At the level of valuation of assets more than e2 — it is advisable to transfer transactions to the market or follow the path of vertical integration with a high level of investment in specific assets. In such a situation, network business structures lose their advantages due to a cheaper transactional market management mechanism, and due to the constant understanding, risks of demand and income of participants, there is an opportunism that should be controlled within a hier archical structure. The separation of network business structures as a separate transaction management structure allows us to draw another very important conclusion for the whole theory of the firm and its key question, why does the firm exist, if transactions can be performed within the market, or what limits the size of the firm and why one large firm cannot do the same or even more than a large number of small firms. Asking about the institutional modeling of the firm provides a new weighty management tools for decision-making economic agents. Recognition of the fact of the existence of transaction costs due to the presence of limited rationality, and hence the inevitable incompleteness (uncertainty) of almost any contractual relationship, and the fact of opportunism, as well as the ability to operate a comparative transaction analysis through the valuation and specificity of assets allows without accurate measurement of transaction costs (which in many cases is impossible) to make effective decisions on production and exchange within management structures that minimize (save) transaction costs.

Transaction Costs Measurement in Practice:the Case of Severstal

Transaction Costs Measurement in Practice:the Case of Severstal

Increasing Corporate Bond Liquidity Premium and Post-Crisis Regulations

I employ the corporate bond liquidity premium to understand the important changes in corporate bond market liquidity from 2004 to 2019. I show that while commonly-used transaction cost measures such as the bid-ask spread have been declining, the corporate bond liquidity premium has actually increased since the financial crisis. For speculative bonds, about 30% of their yield spread now compensates for illiquidity compared to 15% before the crisis. I demonstrate that this increasing liquidity premium is due to investors facing longer trading delays as dealers have become less willing to provide immediacy, and develop a structural over-the-counter model to estimate the latent trading delays implied by the size of the liquidity premium. The estimation results suggest that bonds that took less than one day to sell before the financial crisis now take weeks to trade. Finally, I establish a causal relationship between the major post-crisis regulations and the variations in the corporate bond liquidity premium to uncover the potential cause of dealers' unwillingness to provide liquidity. I show that Basel II.5, by introducing the stressed value-at-risk and incremental risk charges for credit products, contributed the most to increasing the liquidity premium out of all regulatory changes examined. The longer trading delays and the impact of regulations are consistent with practitioners' descriptions of the post-crisis market and corroborate the relevance of using the liquidity premium to understand corporate bond market liquidity.

Option prices and implied volatility in the crude oil market

This paper studies the determinants of WTI crude oil call option prices with a special emphasis on the relationship between implied volatility and moneyness. Our first-stage regression estimates a quadratic approximation of implied volatility as a function of moneyness, while our second-stage regression investigates correlations between the estimated parameters and a list of explanatory variables. The first-stage regressions show a positive coefficient on the quadratic term, suggesting that the market exhibits ‘Implied Volatility Smile’ and hence violates the Black-Scholes predictions. The main results of our paper concern the determinants of these violations. We find that the curvature of implied volatility as a function of moneyness is: (i) positively and significantly correlated with basis and hedging pressure of the underlying crude oil futures contract (ii) positively and significantly correlated with various measures of transaction costs on the options market. We explore various explanations for these results. The paper also contains a variety of robustness checks, mostly related to the assumed functional forms.

When do low-frequency measures really measure transaction costs?

We compare popular measures of transaction costs based on daily data with their high-frequency data-based counterparts. We find that for U.S. equities and major foreign exchange rates, (i) the measures based on daily data are highly upward biased and imprecise; (ii) the bias is a function of volatility; and (iii) it is primarily volatility that drives the dynamics of these liquidity proxies both in the cross section as well as over time. We corroborate our results in carefully designed simulations and show that such distortions arise when the true transaction costs are small relative to volatility. Many financial assets exhibit this property, not only in the last two decades, but also in the previous century. We document that using low-frequency measures as liquidity proxies in standard asset pricing tests may produce sizable biases and spurious inferences about the pricing of aggregate volatility or liquidity risk.

Измерение трансакционных издержек разработки документов стратегического планирования

Измерение трансакционных издержек разработки документов стратегического планирования

INSTITUTIONAL ISSUES FOR THE BULGARIAN TOURISM INDUSTRY FOLLOWING AMENDMENTS IN TAX LEGISLATION

The current study examines the institutional issues in the tourism sector of Bulgaria in terms of the impact of the by-law Ordinance № 18 of 13 December 2006 on the registration and reporting of sales in retail outlets through fiscal devices. The research applies: (1) defining the legal “error”; (2) the information asymmetries that pose a problem to the coordination mechanisms of the organization are described; (3) the negative economic effects are presented through the measurement of transaction costs. In conclusion, proposals have been made to improve this section of the institutional environment.

SOCIO-ECONOMIC INSTITUTIONS FOR DEVELOPMENT OF COOPERATION

The cooperation concept, which in its content can be regarded as an economic phenomenon, the essence of which is the economic relationships between partners in terms of cooperation in order to achieve the common goal of lower specific costs of resources on the basis of mutual benefit for all participants, has become a powerful component and a promising direction. economic development of many countries of the world.The activity of cooperative enterprises takes place in a certain institutional environment, which is defined as a set of fundamental social, political, legal, and economic rules within the framework of human behavior. It is the institutional approach to the cooperation development that is currently at the center of attention of contemporary researchers and needs a detailed analysis. Therefore, the purpose of the article is to study the main institutional imperatives of the development of cooperative relations of business entities in modern conditions.In the article, based on theoretical-methodical analysis and structurally functional approach, the system-forming socio-economic institutes of cooperation are defined. It is determined that among the socio-economic institutions of co-operation, institutions of cost, efficiency, co-operative ideology occupy a significant place. The institution of expenditures is described in detail, defined types of transaction costs (information search, negotiation, measurement, specification and protection of property rights, opportunistic behavior, politicization) and their characteristics in the context of cooperation. The institute of cooperative ideology and its influence on expenses of cooperative association are investigated. It is proved that the main advantage and motive of cooperation is the desire to obtain an additional (synergetic) effect from the interaction of participants. The synergistic effect may be due to the fact that the combined use of several mutually agreed strategies is more beneficial than the isolated implementation of someone and comes as a result of the self-organization of complex systems. The following main elements of the cooperative system of interaction are defined: enterprise integrator, suppliers of material resources, competitors, intermediaries, consumers, etc. The synergy effect in the cooperative is substantiated.

Transaction costs (TCs) in green building (GB) incentive schemes: Gross Floor Area (GFA) Concession Scheme in Hong Kong

It is claimed that transaction costs (TCs) affect the effectiveness of any green building (GB) policy. However, few studies have empirically applied TC analysis to GB incentives, which normally should have analyzed the TCs borne by different stakeholders. These include TC typology and determinants during the implementation process, especially the extra administration process where TCs possibly may be incurred. The lack of such in-depth analysis tends to make incentive-design ignore efficiency and fairness amongst the stakeholders. This study aims to improve the efficiency of GB incentives through analyzing TCs borne by the private sector stakeholders. It would identify TC typologies and determinants, and TCs measurement and allocation to different stakeholders. As TCs are policy context-specific, this paper takes a popular GB incentive scheme, Gross Floor Area (GFA) Concession Scheme, as an example. Interviews were conducted with 20 industry experts to validate TCs types and determinants, and to gauge the magnitude of TCs borne by different stakeholders. These empirical evidences are helpful for policy-makers and practitioners to better understand the impacts of TCs, so as to improve the effectiveness of future incentive schemes. In addition, GB policy recommendations for Hong Kong are proposed and many of which are relevant to other countries.