• A dynamic theory of the use of management control systems in achieving alignment of strategic investment decisions with strategy

      Slagmulder, Regine (1995)
      This research explores how management control systems are designed and used in an organization to help align strategic investment decisions with the firm's strategy. It contributes to the stream of accounting research whose purpose is to shed light on the relationship between management control and strategy. The focus of this research is on the strategic investments in manufacturing plant and equipment because the capital investment in this area constitutes an important business activity over which effective control must be exercised to ensure the best possible quality of the firm's investment programmes.
    • Advanced analytics in pharmaceutical innovation: The use of real-world evidence in oncology

      Geldof, Tine (2019)
      The smart use of real-world evidence (RWE) is known to enable more flexible forms of access to novel medicines. This flexibility may be especially promising for targeted cancer medicines, which often do not align with the traditional approach to medicinal development, and for which therapeutic innovation (i.e. favourable and clinically significant benefits at an affordable price) in routine clinical practice is becoming ever more difficult to achieve due to its highly complex nature. Amongst others, RWE should include information on the performance of those medicines for every individual patient. However, the current estimation of this patientlevel performance using conventional methods from pharmaceutical and medical sciences is challenging. This is because these methods are unable to derive causal conclusions on medicinal performance from the complex real-world environment, as opposed to controlled and randomised clinical trial settings. Simultaneously, the increasing emergence of novel medicines, and their promising combined effects are now creating a new combinatorial complexity level on the captured data. At the same time, new and advanced analytical methods within the field of data science are continuously being developed and have recently been applied to pharmaceutical and medical research, including the domain of pharmacoepidemiology. These powerful methods include techniques such as machine learning and Bayesian approaches, both being recognised as having a transformative potential in clinical research and practice. Specifically, they may be used to gain new insights into the patient-level performance of novel medicines in the messy real world, thereby providing a better understanding of RWE. In doing so, studies may generate new hypotheses through the exploration of data sets, or test existing hypotheses prespecified during prior clinical research. In this dissertation, I present the specific methods of advanced analytics to unravel the complexity of RWE , therefore, increasing our understanding of the individual performance of cancer treatments. These methods are investigated for their use in both hypothesis generation (part 1) and hypothesis testing (part 2) studies. A general ntroduction into the field is provided in Chapter 1, followed by the research objectives. In Chapter 2, I validate the use of an advanced modelling technique, i.e. machine learning, as a personal performance prediction model for glioblastoma. Optimisations of this model to be used on novel medicines in more complex situations are proposed in Chapter 3. In Chapter 4, the importance of multi-product RWE assessments is explored, for which hypotheses. Lastly, for these investigated analytics to become useful in healthcare, the need for an insight-providing federated network is introduced in Chapter 6. Chapter 7, the last chapter of this dissertation, presents a general conclusion with discussion of the research contributions.
    • Bridging the faultline gap: Antecedents of cooperative decision-making in crossed-groups social dilemmas

      De Pauw, Ann-Sophie (2013)
      Teamwork has gained increasing importance in organizations for both decision-making and production. For companies to retain a competitive advantage, more emphasis is placed on processes as creativity and social innovation where added value is created by bundling forces via cooperation in work groups. At the same time in our globalized world, these teams have become more diverse due to increasing internationalization of organizations, in operations and in workforce. Furthermore, strategic processes within and between organizations - such as mergers and acquisitions, alliances, joint ventures and other internal organizational restructurings - result in the formation of newly composed teams, with employees originating from different organizations or departments that are now restructured into one. In these heterogeneous teams, (at least) two subgroups arise. Team members represent two (or more) social entities and categorize members of their own subgroup as ‘in-group’, while considering the other subgroup as ‘out-group’. They are confronted with a crossed-groups social dilemma: continue to act in their self-interest or that of their former team – which is now only a subgroup in the new team – or act in everyone’s interest and contribute to the newly composed team? Free-riding always results in more individual profit on the short-term, regardless of other group members’ choices, but all team members and the organization as a whole are better off if all members cooperate. Aim of this doctoral research is to identify individual and contextual antecedents of cooperation in such heterogeneous teams, in which members – in the presence of subgroups – are confronted with a crossed-groups social dilemma. To realize this objective, five empirical studies investigating these antecedents were conducted. In the first part, we describe the development of the crossed-groups social dilemma game. This game allows to study individual decision-making in heterogeneous teams, in the presence of two (or more) subgroups. Two empirical studies show the effect of group composition: team members cooperate more if their in-subgroup forms a majority than when their own subgroup represents a minority. We also study the effect of social value orientation as an antecedent of cooperation in these heterogeneous teams. Results show that individuals with a prosocial value orientation cooperate consistently, irrespective of group composition, whereas a proself value orientation results in consistent defection. In the second part, we investigate the effect of faultline deactivation as a contextual antecedent of cooperative decision-making in heterogeneous teams. ‘Faultlines’ are hypothetical dividing lines that split up a team in two (or more) subgroups based on one or more attributes, such as pre-merger team membership. The results of two empirical studies show that faultline deactivation – via a common goal for the team – makes team members less sensitive for (sub)group composition when deciding to cooperate (or not): more team members cooperate consistently, irrespective of group composition, but also more team members defect consistently. To address the latter phenomenon it can be of importance to combine a common goal for the team with other managerial strategies, such as leadership. In the third part, we describe the impact of a visionary leader, with a common goal and a long-term vision for the future of the team, on cooperation in these heterogeneous teams. Results of the empirical study show that the visionary leader can increase cooperation levels in the heterogeneous team. Moreover, there is not only more consistent cooperation of team members, but also less consistent defection. The leader’s affiliation with the ‘in-subgroup’ or the ‘out-subgroup’ has no impact on team members’ cooperation in this study.
    • Capital regulation of financial institutions, the role of ratings and the tension field between regulation and economic reality

      Van Laere, Elisabeth (2011)
      The capital regulation of financial institutions, the role of ratings and the tension field between regulation and economic reality Over the past decade, the economic environment has been characterised by high-profile business scandals and failures, in which different company stakeholders were involved. In July 2007, the world entered the most profound and disruptive crisis since 1929. Initially originating in the US, it has evolved into a deep and complex crisis at global level, resulting in significant economic damage. Lack of market transparency, the abrupt downgrading of credit ratings and the failure of Lehman Brothers have initiated a global breakdown of trust. In autumn 2008 interbank markets shot down, creating a liquidity crisis that is still having a profound impact on the cost and availability of credit, financial markets and the macro-economy as a whole. Both government and Central Banks have taken numerous measures to address the systemic risk and to refuel the economy. However, it has become clear that the regulatory framework and measures in place were insufficient to tackle the crisis. As such, regulatory and supervisory financial authorities are currently confronted with major challenges. In light of these recent developments, this research contributes to the fundamentals of capital regulation of financial instructions and the use of internal and external ratings in that respect. Chapter 1: On the road to a safer banking system? Theory and evidence on capital regulation in Europe Traditionally capital requirements have been the foundation of regulation for banks. To protect banks against failure and to prevent an economic crisis due to contagion and systemic risk, different stakeholders want banks to maintain a certain level of capital. Rating agencies, supervisors and debt holders want higher capital to support solvency, shareholders want lower capital to boost profitability and even the behaviour of other banks might impact the target capital ratio. As a result of these conflicting interests, bank capital needs to be optimized with as a key purpose to internalise the social costs of potential bank failures. The capital adequacy requirements in place have been found inadequate, and as a reaction major steps to move the banking system are currently being taken. Taking into account these evolutions, it is interesting to know the extent to which recommendations have been adopted and whether the reforms have been and are perceived to be beneficial to the European banking sector. Based on guidance from academics, supervisors and policy makers, we have put together an extensive survey that is used for interviews with various bank managers and chief risk officers from European banks. The first chapter of this PhD presents new evidence on where European banks are with respect to capital regulation and on how the future road to a safer banking system should look like. By commenting on differences and similarities between the financial institutions we have questioned,we describe the present state of affairs with respect to Basel II implementation, regulatory and economic capital calculations and Basel III expectations. In doing so, we also address another objective of the Basel Committee, the creation of a level playing field, albeit in an indirect way. Banks believe that reinforcement and the realization of effective supervision is the main criterion for the realization of a more stable financial market. This confirms the important role our research assigns to the supervisor. One of the major difficulties will be to make a reliable estimate on how far the capabilities of supervisors go. Another difficulty on the subject of supervision is that it is still a national responsibility that will not be centralised very quickly for political reasons. Furthermore, we believe Basel III entails a lot of improvement, but in line with the academics and opinion leaders and regulators and supervisors, we feel that Basel III should look more comprehensively at the risks. We entered a financial crisis because assets that were full of worth suddenly became worthless. With this in mind, regulators should reconsider their way of treating assets on a bank s balance sheet in a more detailed way. Chapter 2: The development of a simple and intuitive rating system under Solvency II Another type of financial institution that has been both victim and cause in the financial crisis are the insurance companies. Notwithstanding the fact that insurance companies are very important players in financial markets who are involved in many credit risk exposures and as a consequence are also prone to high levels of uncertainty and solvency issues, literature on the topic is scarce (Florez-Lopez, 2007). Due to the Solvency II Directive, also insurers are currently being confronted with new regulatory requirements that promote internally developed risk models. This evolution emphasises the importance of credit risk assessment through internal ratings. In light of this new prudential regulation, and taking into account the limited data and modelling experience of insurance companies and the scarcity of academic research on insurance companies, the second chapter of this dissertation suggests a Basel II compliant approach to predicting credit ratings for non-rated corporations and evaluates its performance compared to external ratings. In developing the model, broad applicability is set as an important boundary condition. Even though the model developed is fairly simple and maintains a high level of granularity, it gives high rates of accuracy and is very interpretable. Chapter 3: Analyzing bank ratings: key determinants and procyclicality While upgrading financial regulations and supervision in order to prevent future crises, many authorities are being confronted with the fact that risks taken in the process of financial intermediation are difficult to observe and assess from outside the bank. In the absence of tight regulations, this opaqueness exposes banks to runs and systemic risk. In order to reduce this lack of transparency, credit rating agencies (CRAs) provide information that can help various stakeholders to evaluate the credit risk of issues and issuers. Even though CRAs have been criticized a lot in the latest crisis, for many observers of financial markets, credit ratings continue to play an essential role. Morgan (2002) shows that Moody s and S&P have more split ratings over financial intermediaries, suggesting that banks are more difficult to rate because of their opaqueness. This additional lack of transparency is linked to the banks asset base and their high leverage, which create agency problems and further increase uncertainty over their assets. So far the research linked to ratings of financial institutions is rather limited. The third chapter of this dissertation presents a joint examination of how different factors influence the assignment of S&P and Moody s long term bank ratings using a unique data set covering different regions, bank sizes, and bank types. In doing so, we include new bank and country specific variables. Furthermore, we include measures of the business cycle in our analysis to determine whether long term bank ratings tend to be related to the cycle after conditioning on a set of variables. Using annual data on US and European banks rated by S&P and/or Moody s, we find that the bank ratings of both agencies exhibit a different sensitivity to the business cycle. Finally, we check our findings on a sample of banks that are rated by both rating agencies while controlling for potential sample selection bias. Our findings are highly relevant for various bank stakeholders, who often tend to assume that Moody s and S&P have equivalent rating scales and rating processes. This paper shows clear evidence that this is not necessarily the case. Moody s and S&P seem to have different rating determinants, different sensitivity towards the business cycle and behave differently when rating banks that are rated by both of them. We believe that the findings of this dissertation are highly relevant for various bank stakeholders and academics. As such, we hope that the outcome of our three chapters will be used in further discussions on the regulation of financial institutions, the role of ratings and rating agencies and finally, on how to reduce the tension field between theory, regulation and economic reality.
    • Cross-border cost allocation: application of beneficiary pays principle to electricity transmission investments

      Hadush, Samson Yemane (2014)
      Massive electricity transmission investments are needed to achieve the energy and climate policy objectives of the European Union. The alignment of national and European interests remains the key challenge behind the realization of these investments. This thesis contributes to the design of efficient cross-border cost allocation solution as one of the regulatory tools that can play a significant role in aligning these interests. Trends in practice indicate the application of beneficiary pays principle to solve the cost allocation problem. Within the academic circle, this has been the long standing core principle of solving cost allocation problems. However, its application to cross-border electricity transmission investments with a strong national decision-making power is not widely studied. This thesis reviews various cost allocation methods to check their suitability to apply this principle. The findings indicate that these methods leave open questions regarding which benefit indicators to use for allocating the investment cost and how compensation issues are handled. Therefore, a framework to apply the beneficiary pays principle is required. Introducing transmission investments from a welfare analysis perspective, the thesis develops a framework to apply the beneficiary pays principle to solve the cost allocation problem. An important element of this framework is the use of congestion revenue as part of the solution. The design involves using congestion revenue in a compensation logic to ensure voluntary cooperation among participating countries. The designed framework is then applied in the context of two important developments in transmission investments in Europe: Projects of Common Interest (PCI) and offshore wind interconnection projects. The results show that the framework can help align national and European interests in projects with European relevance. Moreover, important implementation issues are identified.