Alex Russell

Evidence of Managerial Short-termism in the UK

This paper considers an aspect of possible managerial short-termism in the UK. It discusses some potential motivations for that phenomenon and presents evidence which suggests that short-termism exists and is positively associated with managerial perceptions of capital market valuation practices. Two hypotheses were developed and tested using the responses concerning RD and that the extent to which managers behave as hypothesized above is positively associated with their perceptions of the level of emphasis placed by the capital market on measurements related to short-term reported earnings. The results obtained support the hypotheses. Overall, the evidence of the paper is consistent with the view that many finance directors of large UK companies are short-termist in their perceptions and that such short-termism is positively associated with their beliefs about the level of emphasis placed by the capital market on figures of reported earnings.

Managerial Choices in the Valuation of Acquired Goodwill in the UK

Abstract During the 1980s the UK regulations affecting accounting for acquired goodwill allowed managers to make accounting choices affecting recorded goodwill that best served their particular interests. This paper develops and tests the hypothesis that the proportions of purchase price assigned to separable net assets and consequently to goodwill are affected by gearing (leverage) and other considerations.

The rationale for accounting for goodwill

Abstract This paper discusses the basis for accounting for goodwill on acquisitions in the UK under the assumption that a primary purpose of financial statements is to monitor and motivate the financial performance of management. It establishes a case against the immediate write-off of goodwill to reserves and in favour of the capitalisation and amortisation of purchased goodwill. As the limited objective of the analysis is the improvement of current practice, the argument proceeds by reference to historical cost accounting.

An analysis of Libya’s revenue per barrel from crude oil upstream activities, 1961‐93

This paper: (a) briefly describes the contractual agreements between Libya and the oil and gas companies operating within the country from 1961 to 1996; (b) presents a detailed analysis of the factors which affect state revenue from crude oil production; and (c) presents an analysis of Libya’s revenue per barrel of oil from 1961 to 1993. The review and analysis is important for at least two reasons. First, Libya has neither satisfactorily diversified its economy nor achieved high growth rates in the non-oil sectors. Hence, it is important for Libyans and oil and gas analysts to evaluate the efficiency with which the Libyan state has managed its oil and gas reserves. And secondly, since Libya’s national development programmes, GDP, foreign trade, balance of payments and inter-national reserves still depend heavily upon oil revenue, the analysis should prove to be of interest to other developing countries, as well as to Western observers. This analysis of Libya’s per barrel revenue over an extended period of time is new and revealing.

National impediments to international harmonization: Evidence of lobbying in the U.K.

Abstract The international harmonization of financial reporting requires national acceptance of international standards. Accounting for goodwill in the U.K. provides an interesting case study of the pressures that can influence national standards in a direction contrary to that required for harmonization. The paper outlines the theoretical issues and historical UK context of accounting for goodwill and provides evidence of lobbying that is consistent with the hypothesis that managers and auditors lobby in furtherance of their vested interests. The implications of the UK experience for international harmonization are briefly discussed.

Evidence that the Terms of Petroleum Contracts Influence the Rate of Development of Oil Fields

This paper presents evidence that the main determinant of the rate of development of Libyas crude oil upstream activities, from 1961 to 1999, was the terms of the petroleum contractual agreements, which existed between the state and the international oil industry during that period, and that US sanctions against the Socialist Peoples Libyan Arab Jamahiriya failed to affect this rate of development. In keeping with other Members of the Organisation of the Petroleum Exporting Countries (OPEC), Libya has, over three decades, been a key player in helping to regulate global production levels of oil and gas. However, the economic and political strengths and weaknesses of individual Members of OPEC vary widely and it is inevitable that the stresses arising from adherence to OPEC policies will vary proportionately to these strengths and weaknesses. It is instructive, therefore, to analyse how successfully Libya has exploited its own petroleum resources. The results are thought-provoking and send signals to the superpowers of the futility of economic sanctions against countries whose political policies they find distasteful. Further, the analysis highlights the need for OPEC Members to be fully informed of the significance of the terms of the petroleum agreements they employ in their countries.