Transaction Costs Research Articles

A study on the impact of digital governance on disclosure quality of listed companies

Through empirical analyses, this paper confirms the beneficial influence of digital governance on the information disclosure quality of listed companies. Additionally, it uncovers the intermediary roles played by managerial transaction costs and human capital structure. Furthermore, the study investigates the varying impacts of corporate geographical location and property rights characteristics on the efficacy of digital governance. The findings indicate that digital governance noticeably enhances information disclosure quality, diminishes managerial transaction costs, and refines human capital structure. Moreover, listed companies in the eastern regions and those that are state-owned have experienced more substantial advancements in disclosure quality due to digital governance.

Enhancing Pharmaceutical Supply Chains through Blockchain Technology on Hyperledger Fabric Implementation

Background: The complexity and dynamism in business environments necessitate the adoption of advanced technologies to enhance supply chain (SC) processes and routines. In the pharmaceutical industry, maintaining high standards of safety and visibility within SCs is critical. Challenges arise from the proliferation of online medical stores and the need for uniform medication safety standards. The shift towards digital SCs has brought about significant changes, demanding improvements in efficiency and transparency. This study explores the potential of Blockchain technology (BcT) to revolutionize SC processes, particularly in the pharmaceutical sector. By integrating BcT, which offers transparency and security, pharmaceutical SCs can address issues related to data integrity, cost management, and operational efficiency. Methods: A qualitative content analysis was conducted to assess the impact of BcT on SC practices, using transaction cost economics. The study evaluated how BcT can enhance visibility, reduce transaction costs, and improve the management of pharmaceutical SCs. Hyperledger Fabric, a BcT platform, was used to design and implement a secure medicine distribution system in a smart hospital setting. Results: Implementation of BcT through Hyperledger Fabric demonstrated significant improvements in transaction speed and efficiency. Performance tests showed consistent reaction times and transaction rates even with increasing user loads. For instance, the system maintained a reaction time increase of only 20 milliseconds with 300 users and achieved a mean transaction processing rate of 120 transactions per second with a user group of 300. Conclusion: The integration of BcT in pharmaceutical SCs addresses key issues related to safety, transparency, and efficiency. By utilizing BcT and Hyperledger Fabric, the study provides a robust framework for managing pharmaceutical supply chains, improving data integrity, and reducing transaction costs.

Comparative Analysis of ETF Arbitrage Strategy in Efficient and Inefficient Markets

This paper analyzes the different performance of an ETF arbitrage strategy in efficient and inefficient markets, the markets of the United States and Russia. It would initiate from the ETFs and their importance to the global financial market. Then, the paper introduced what the arbitrage strategy is, and how it works. Then, by comparing the key factors, it classifies efficient market, the U.S. market, and the inefficient market, the Russian market. In the paper, the S&P 500 ETF represents the U.S. market, and the VanEck Russia ETF (RSX) represents the Russian Market. The paper analyzes the performance in these two markets from 2016 to 2021 and ignores the transaction costs. The paper concluded that the ETF arbitrage strategy performed better in the inefficient market (Russia) compared to the efficient market (U.S.). Limitations are acknowledged in the paper, such as the effect of transaction costs, which would reduce the actual profits and returns, and that the historical market data might not strong enough in predicting the future performance of the market. These would lead to future research and further analysis to enhance the overall effectiveness of the project and make it aligns more closely with the real-world conditions.

Automated market makers and their implications for liquidity providers

Automated market making for crypto tokens is an extremely attractive and efficient way to establish decentralized exchanges. An inevitable prerequisite for this type of market is the willingness of participants to provide liquidity. Except in the case of two correlated pairs, providing liquidity is often sub-optimal. In fact, one often faces significant opportunity cost commonly referred to as impermanent loss. Prevailing transaction fee levels, even with levered positions, are often insufficient to compensate for the opportunity costs incurred. Marketability and exchangeability are essential prerequisites for attributing value to many crypto tokens. Therefore, when issuing fiat tokens for the viability of intriguing business models, one ends up with the chicken-or-the-egg causality dilemma; how to achieve sustainable incentives to the liquidity provision for an abstract good whose intrinsic value is defined solely by that liquidity system? This article derives and discusses useful formulas for the quantitative risk management in the context of automated market makers. In addition, order size and pool size-dependent transaction costs are proposed that may incentivize the desired level of liquidity.

EXPRESS: Monitoring Technologies in Industrial Systems

Monitoring technologies, which are at the heart of the industrial Internet of Things (IOT) ecosystems, promise significant transactional efficiencies by making it easier to track product performance and contract compliance. These efficiencies are particularly compelling in industrial multi-vendor, multi-component systems, where complex component interdependencies often cause disputes around liability in the case of product failures. Drawing on transaction cost theory, fieldwork, and a national survey of industrial original equipment manufacturers we estimate how product performance contracts are specified in these contexts, and how these monitoring technologies can impact ex-post exchanges between OEMs and their suppliers. We find that systems architecture associated with the multi-component systems, as well as the presumed efficiencies of monitoring technologies, drive the contract designs through their potential impact on the disputes, monitoring, and contract writing costs faced by the OEM. However, we also find there are clear limits to the benefits offered by these monitoring technologies. The greater monitoring facilitated by these technologies appears to exacerbate disputes. This counterintuitive finding comports with the view that, when unforeseen interdependent failures occur, detailed data from monitoring may trigger a spate disputes over new and unexpected information, as well as over the appropriateness of existing protocols for failure metrics and remedies.

Accounting outsourcing intensity in Vietnam: Empirical evidence from Vietnamese small and medium-sized enterprises

This study focuses on developing a strategic management tool for small and medium-sized enterprises (SMEs), where outsourcing is seen as an effective method. Outsourcing allows SMEs to concentrate on their core strengths and compete despite limited resources. In Vietnam, SMEs make up over ninety percent of all businesses and play a key role in the economy. However, they face challenges due to limited resources, especially in managing accounting functions. This research examines the factors influencing the level of outsourcing among SMEs in Vietnam based on two key theories: Transaction Cost Theory (TCE) and the Resource-Based View (RBV). A sample of 236 questionnaires was analyzed using SPSS and regression models. The findings revealed positive and significant relationships between outsourcing intensity (OS.Intensity) and four factors: asset specificity (AS), frequency of accounting tasks (FREQ), trust (TRUST), and technology competence (TECH). The study supports the trend of accounting outsourcing for Vietnamese SMEs, allowing them to enhance their internal strengths despite resource constraints. Future research to gain a deeper understanding of accounting outsourcing is also suggested.

Transaction cost effects on maize spatial price differences in Njombe market, Tanzania

Previous studies have demonstrated that tangible and intangible transaction costs influence spatial price differences. The difference between the prices at which producers sell their goods, and the prices at which consumers purchase them is exacerbated by transaction costs. This indicates that farmers receive a lower price from buyers, who then charge consumers a greater price at urban marketplaces. However, existing documentation provides limited information on the relationship between spatial price differences and their drivers. Most research focused primarily on the co-movement of prices and the co-integration test, with little attention paid to the effects of transaction costs on spatial price differences. Thus, the paucity of information in the literature motivated the undertaking of this specific study. Therefore, this study assessed the impact of transaction costs on spatial price differences of maize in the Njombe District of Tanzania. A semi-structured questionnaire was developed and employed to collect information from maize traders. Also, checklists were used to collect information from market leaders. Both descriptive and quantitative analyses were undertaken. In the descriptive analysis, means and percentages were generated. On the other hand, in the quantitative analyses, the Ravalion model which is based on the co-movement of prices, was modified to fit the study in question and estimated. The outputs generated from the modified model were used for inferences. The estimated model results showed that transaction costs (transportation costs, years of schooling, bribery, and the number of maize bags carried in one trip) have significant effects on spatial price differences. Moreover, market leaders revealed that because of the poor quality of the roads, individual farmers find it challenging to deliver their produce to the Njombe market. Consequently, they obtain a low price when they sell their produce at the farm level. The study recommends deliberate measures to reduce transaction costs, such as improving urban and rural infrastructure, simplifying bureaucratic procedures that provide room for corruption, and, finally, promoting large-scale production or collective actions to reduce transaction costs. Key words: Spatial price differences, transaction costs, markets, maize, farmers, traders

Of Principals, Agents, and Transaction Costs: A Response to d’Avray

Of Principals, Agents, and Transaction Costs: A Response to d’Avray

Graph neural network based phishing account detection in Ethereum

Abstract In recent years, the widespread adoption of Ethereum-based transactions, such as cryptocurrencies and blockchain technologies, have revolutionized the way financial transactions are conducted. These decentralized and transparent systems offer numerous advantages, including enhanced security, immutability, and reduced transaction costs. However, alongside their benefits, Ethereum-based transactions have also attracted the attention of malicious actors seeking to exploit unsuspecting users through phishing scams. Phishing scams have thus become frequent in this scenario. Therefore, it is required to implement an effective and reliable phishing scam detection method. In this paper, we present the implementation of a highly efficient detection method by carrying out a graph-like data network formation, over which we then apply models that are based on graph neural networks like Magnet Link Prediction and Graph AutoEncoder Pathfinder Discovery Network Algorithm (GAE_PDNA). This helps in extracting useful information from the nodes of the graph. After relevant embeddings have been obtained, the classification of the phishing account is performed using AdaBoost classifier that helps in complex decision-making and detects the accounts related to the phishing scams. Our best model attains a precision of 0.99 and an F1 score of 0.99. Highlights

Application of blockchain technology in agricultural supply chain management: economic implications and challenges

This study investigates the impact of blockchain technology adoption on agricultural supply chains, focusing on transaction costs, supply chain efficiency, and farmer income. Utilizing panel data from 500 agricultural enterprises across 10 countries over a five-year period, we employ fixed effects and dynamic panel models to analyze the economic effects of blockchain implementation. Our findings reveal that blockchain adoption is associated with significant reductions in transaction costs, improvements in supply chain efficiency, and increases in farmer income. The study addresses endogeneity concerns through instrumental variable estimation and conducts extensive robustness checks to validate the results. Our analysis provides empirical evidence for the transformative potential of blockchain technology in addressing key challenges in agricultural supply chains, including information asymmetries and inefficiencies. The findings have important implications for policymakers and practitioners seeking to enhance the competitiveness and sustainability of agricultural systems through technological innovation. This research contributes to the growing literature on digital agriculture and offers insights into the role of blockchain in shaping the future of global food systems.

Contract, network or hierarchy? Selecting governance mechanisms in megaprojects from the perspective of contractor alliances

Understanding the evolving governance mechanisms in megaprojects is crucial for reducing transaction costs and ensuring project success. However, previous literature primarily discusses the results of selecting governance mechanisms at different phases, with little research exploring the reasons behind these choices. To fill this gap, this article addresses the question of how to select effective governance mechanisms at different phases from the perspective of contractor alliances, based on transaction cost economics (TCE). We employ a longitudinal exploratory case study method to analyse the governance mechanism selection process across three phases (i.e. contractor alliance formation phase, shield construction phase and crisis response phase) of a large infrastructure project in China. The results indicate that the likelihood of opportunistic behaviour, uncertainty and the duration of the phase jointly explain the reasons for selecting specific governance mechanisms. Additionally, we also find that contractual governance, network governance and hierarchical governance are typically complementary in multiple phases of megaprojects. This article provides valuable managerial insights for future governance practices in megaprojects.

European Commission’s Draft Regulation on SEPs: An IP Finance Assessment

Abstract The European Commission’s proposed Draft Regulation on Standard Essential Patents (SEPs) aims to overhaul the landscape of SEP licensing, addressing transparency deficits and fair, reasonable, and non-discriminatory (FRAND) terms amidst the burgeoning Internet of Things (IoT) market. Emphasizing concerns over hold-up risks, the Draft Regulation introduces mandatory essentiality checks and structured FRAND determinations to mitigate opportunistic behaviours among SEP holders. However, the practical implementation of these measures poses challenges, including the accuracy of essentiality assessments and the potential for increased transaction costs. Moreover, the Draft Regulation fails to consider the financial dimension of technological innovation, namely the potential of SEPs to function as valuable financial assets. By undermining the economic value of SEPs in terms of enforcement and monetisation, there is a risk of watering down their potential to serve as valuable financial collateral and therefore to help innovators access debt financing.

The impact of formal and informal credit institutions on entrepreneurship

Purpose How do informal lending institutions affect entrepreneurship? This paper aims to investigates the role of formal and informal credit market institutions in the decision to become an entrepreneur over the life cycle. Design/methodology/approach The author developed a dynamic Roy model in which a decision to become an entrepreneur depends on the access to formal and informal credit markets, nonpecuniary benefits of entrepreneurship, career-specific entry costs, prior work experience, education, unobserved abilities and other labor market opportunities (salaried employment and nonemployment). Using detailed Russian panel microdata (the Russia longitudinal monitoring survey) and estimating a structural model of labor market decisions and borrowing options, the author assesses the impact of the development of informal and formal credit institutions. Findings The expansion of traditional (formal) credit market institutions positively impacts all workers’ categories, reduces the share of entrepreneurs who borrow from informal sources and incentivizes low-type entrepreneurs to switch to salaried employment. The development of the informal credit market reduces the percentage of high-type entrepreneurs who borrow from formal sources. In the case of default, a higher value of the social network or higher costs of losing social ties demotivate low-type entrepreneurs to borrow from informal sources. The author highlights the practical implications of estimates by evaluating policies designed to promote entrepreneurship, such as subsidies and accessibility regulations in credit market institutions. Originality/value This study contributes to the literature in several ways. Unlike other studies that focus on individual characteristics in the selection for self-employment [Humphries (2017), Hincapíe (2020), Gendron-Carrier (2021), Dillon and Stanton (2017)], the paper models labor and borrowing decisions jointly. Previous studies discuss transitions between salaried employment and self-employment, taking into account entrepreneurial earnings, wealth, education and age, but do not consider the availability of financial institutions as a driving factor for the selection into self-employment. To the best of the author’s knowledge, this paper shows for the first time that the transition from salaried employment to self-employment is standard and consistent with changes in access to financial institutions. Another feature of this study is incorporating both types of credit markets – formal and informal. The survey by the European Central Bank on the Access to Finance of Enterprises (2018) shows 18% of small and medium enterprise in EU pointed funds from family or friends. Therefore, the exclusion from consideration of informal credit markets may distort the understanding of the role of the accessibility of credit markets.

Index futures mispricing: a multi-regime approach to the NIFTY 50 Index futures

PurposeThis study investigates the mispricing dynamics of NIFTY 50 Index futures, drawing upon daily data spanning from January 2008 to July 2023.Design/methodology/approachThe study employs both a single regime analysis and a tri-regime model to understand the fluctuations in NIFTY 50 Index futures mispricing.FindingsThe study reveals a complex interplay between various market factors and mispricing, including forward-looking volatility (measured by the NIFVIX index), changes in open interest, underlying index return, futures volume, index volume and time to maturity. Additionally, the relationships are regime-dependent, specifically identifying the regime-dependent nature of the relationship between forward-looking volatility and mispricing, the impact of futures volume on mispricing, the effect of open interest on mispricing, the varying influence of index volume and the influence of time to maturity across the three distinct regimes.Practical implicationsThese findings offer valuable insights for policymakers and investors by providing a detailed understanding of futures market efficiency and potential arbitrage opportunities. The study emphasizes the importance of understanding market dynamics, transaction costs and timing, offering guidance to enhance market efficiency and capitalize on trading opportunities in the evolving Indian derivatives market.Originality/valueThe Vector Autoregression (VAR) and Threshold Vector Autoregression Regression (TVAR) models are deployed to disentangle the interrelationships between NIFTY 50 Index futures mispricing and related endogenous determinants.Research highlights (1)This study investigates the Nifty 50 Index futures mispricing across three distinct market regimes.(2)We highlight how factors like volatility, futures volume, and open interest vary in their impact.(3)The study employs vector auto-regressive and threshold vector auto-regressive models to explore the complex relationships influencing mispricing.(4)We provide valuable insights for investors and policymakers on improving market efficiency and identifying potential arbitrage opportunities.

Research on the Development and Influence of Internet Supply Chain Finance on Enterprises

In todays digital era, the evolution of internet supply chain finance presents trans-formative opportunities and challenges for enterprises worldwide. This research explores the development and influence of Internet supply chain finance on enterprises, examining its impact on financial management, operational efficiency, and strategic competitiveness within supply chain networks. The study delves into the growing adoption of Internet supply chain finance solutions by enterprises seeking to optimize working capital, streamline transaction processes, and enhance collaboration with suppliers and partners. As digital technologies reshape traditional finance practices, understanding the implication of Internet supply chain finance becomes imperative for businesses navigating complex global supply chains. A comprehensive literature review synthesizes existing knowledge on internet supply chain finance. Preliminary findings suggest that Internet SCF offers significant advantages to enterprises, including improved liquidity management, reduced transaction costs, and enhanced supply chain resilience. However, challenges such as personal security risks and integration complexities underscore the need for strategic planning and technological readiness. By elucidating the development and influence of internet SCF on enterprises for practitioners, policymakers, and scholars in the field of supply chain finance and digital transformation.

Analisis Faktor-Faktor yang Mempengaruhi Biaya Transaksi Nasabah pada PT Bank Perkreditan Rakyat Nusuma Gondang Legi Malang

This study aims to analyze the factors that affect customer transaction costs at PT Bank Perkreditan Rakyat Nusuma Gondang Legi, Malang, using qualitative methods through library research using secondary data from sources such as the bank's official website, books, journals, and related articles. The results show that the cost of obtaining third-party funds has a significant positive effect on transaction costs, while bank operational costs do not. Target profit margin and timely payment incentive costs have a significant positive effect, but loan risk costs and asset depreciation are not significant. In conclusion, factors related to bank management and operations, including cost of obtaining funds, operational costs, target profit margin, timely payment incentive costs, and asset depreciation costs, have a significant effect on customer transaction costs. Effective management is needed to minimize transaction costs and improve the efficiency of the banking industry, providing additional insights for further analysis development in supporting the growth of the banking sector

The Impact of Digital RMB Promotion on China's Corporate Financial System and Policy Recommendations

With the deep development of the digital economy era, digital RMB, as an important form of central bank digital currency, plays an increasingly crucial role in China's financial system. It not only has all the functions of traditional currencies, but also shows unique advantages in enhancing payment efficiency, reducing transaction costs, and improving financial regulatory capabilities. This study conducted an in-depth analysis of the impact of the promotion of the digital RMB on China's corporate financial system by visiting and researching a number of enterprises and collecting financial data over a five-year period. The study finds that the promotion of digital RMB has facilitated the convenience of inter-company payments and settlements, enhanced the traceability of financial data, and positively impacted the enhancement of corporate credit availability and financial service innovation. However, there are also challenges such as increased costs for enterprises to adapt to the new system and risks of digital currency custody. Based on this, this paper constructs a multi-level analytical framework to systematically sort out the mechanisms of the impact of digital RMB on the corporate financial system, and puts forward a series of policy recommendations accordingly. These recommendations involve strengthening the construction of corporate digital infrastructure, coordinating the interface between digital RMB and existing financial regulatory policies, and enhancing corporate digital currency knowledge training. This study aims to provide theoretical support and empirical references for policy formulation and financial decision-making by government departments, financial regulators, and enterprises in the digital currency era.

Revisiting research on the governance of interorganizational relationships

This essay re-examines the literature on the governance of interorganizational relationships, focusing on the insights of alliance research using transaction cost economics. Despite substantial progress, challenges arise because research has not devoted attention to some mechanisms of governance (i.e., administrative controls and supporting legal institutions) compared with others (i.e., incentives). Parties can develop bespoke collaborative agreements that mix and match various mechanisms of governance along these dimensions, rather than accessing a typical bundle commonly associated with a discrete organizational form. This conclusion challenges the iconic governance continuum and surfaces new methodological opportunities for this research stream. The essay also challenges what we think we know by identifying a variety of omitted variable problems that often crop up in governance research (e.g., focusing on the cooperative context of collaboration while not attending to the competitive context, excluding critical administrative structures when studying the interplay between contracts and trust, assuming transactional attributes are exogenous rather than endogenous to a search process, failing to account for shifting institutional supports for collaboration, etc.). By clarifying what we know and do not know about alliance governance, the essay identifies some pathways for developing more reliable, cumulative knowledge on interorganizational relationships.

Infrastructure as a service adoption model for South African universities using thematic analysis

Background: South African universities are dealing with concerning socio-economic issues and budgetary limits that affect university operations negatively. It is no longer viable for most universities to purchase and maintain information technology (IT) infrastructure systems while also keeping up with the ever-changing technology across the world.Objectives: The aim of this article is to explore the benefits that come with infrastructure as a service (IaaS), as compared to the on-premises model that is currently used by most South African universities.Method: This article adopts both transaction cost theory (TCT) and diffusion of innovation theory (DOI) as the underpinning theories. The interpretivist paradigm was applied to gain a comprehensive understanding of how university management perceives IaaS adoption.Results: The results introduce three new and critical factors that need to be considered by university managers whenever they want to move their on-premises IT model to cloud IaaS: trust, security and attitude.Conclusion: The research finds that IaaS offers advantages in scalability, flexibility, accessibility and on-demand deployment. These findings underscore the importance of addressing barriers to IaaS adoption within the specific context of South African universities.Contribution: The findings of this article add to the cloud computing literature, by presenting a new model that IT decision-makers can utilise when considering moving their on-premises IT infrastructure to IaaS in South African universities. The article recommends that future research could expand the number of universities from which data are collected.

Optimizing the moving average trade rule for cryptocurrencies: implications of band size and transaction costs

ABSTRACT In this paper, we apply an adjustable-band moving average algorithm to study technical analysis profitability in cryptocurrency markets. We find three main results. First, adjustable band trade rules act like a leveraged bet: they outperform fixed band rules in years when technical analysis is profitable and under-perform in other years. Second, our algorithm suggests significantly higher than standard 0% and 1% optimal band parameter values. Third, by comparing adjustable band rules with higher fixed band rules, we show that adjustable band rules have value beyond finding high optimal bands. Technical traders should consider higher and adjustable-band rules, especially with above-zero transaction costs.