News and Views from CRAFiC and its members

News: The Brexit Millionaires, Prof Prem Sikka and Channel 4 Dispatches

Professor Prem Sikka was featured on Channel 4's Dispactches programme on 11 March 2019.

Professor Sikka discussed how much money leading Brexiteers have earned in investments since the referendum, and submitted a 15 page document to the show's researchers to support his claims in the programme.

The Dispatches team put these figures to leading Brexiteer and Conservative Jacob Rees-Mogg.

Click here to watch the episode.

Comment: Here’s why you shouldn’t trust the Tories’ tax revenue figures, Prof Prem Sikka

How do you spot a deadbeat government? Well, a good indicator is when it does not respond with a reasoned argument but instead seeks refuge in numbers that are almost impossible to corroborate.

One such event occurred yesterday in the House of Commons during Prime Minister’s Questions. Labour leader Jeremy Corbyn focused on the shortcomings of the government’s policies on curbing tax avoidance.

Rather than engaging with the arguments, Prime Minister Theresa May responded by throwing around figures. One of her claims was that the government has raised an extra £160bn through extra compliance measures taken since 2010. Is that so?

Click here to read the full article.

Comment: From Westminster to Stormont – forty years of failed housing policies, Dr Stewart Smyth

Public housing has always been financially sustainable – it is political choices over the past forty years that have sought to undermine social tenure, writes Stewart Smyth. He explains how housing policy has evolved in Northern Ireland and makes the case for a new approach.

It was a tragic and unwelcome co-incidence to launch a report about public housing in the same week of the horrific fire in west London’s Grenfell Tower. We will need to wait for the investigations to establish the exact causes of the fire but one conclusion is immediately evident. This tragedy arose from an environment of cuts in funding, de-regulation, outsourcing and privatisation policies that have been applied to all public services over the past forty years. Even before the austerity policies of the Coalition government, council tenants suffered from what was known as the Moonlight Robbery.

In 2008/09, council tenants in England paid £1.4 billion more in rent than the management and maintenance allowances spent on their homes. In the following year, according to the government’s own calculations, it was estimated that Kensington and Chelsea needed an increase of nearly £5 million in that year alone, in repairs allowances.

Click here to read the full article.

Comment: Reflecting on a workshop on Post-Brexit Industrial and Regional Policy, Prof Sumon Bhaumik

In March 2017, Professors from the University of Sheffield (Sumon Bhaumik, Heather Campbell and Philip McCann) sat around the table with peers from Aston (David Bailey) and Warwick (Nigel Driffield) Business School to discuss post-Brexit industrial and regional policy.

They were joined by representatives from regional bodies, trade bodies, and the private sector including representatives of Oxford Economics, Performance Engineered Solutions Ltd, Sheffield City Region, South and East Yorkshire Federation of Small Businesses, South Yorkshire International Trade Centre, The Company of Cutlers in Hallamshire, and West Yorkshire Combined Authority.

The view about the likely impact of Brexit on trade, investment and corporate performance was mixed. The private sector view emphasized the positive economic news in the immediate aftermath of the referendum, and the ability of the private sector companies to strategize better for Brexit, which is expected at this stage, than for the financial crisis of 2008, which was unexpected. There was general consensus that the significant depreciation of the pound sterling could spur exports and firm performance, at least in the short term. The impact of Brexit on onshoring was also viewed as a potential opportunity, especially for SMEs. There was some optimism about UK’s ability to strike trade deals relatively quickly with countries from the Middle East and Latin America.

Click here to read the full article.

Dr Naoko Komori: Translating Japanese Popular Culture: Successful kick-off event in Kobe

In May 2017, Dr Komori was an organiser of the first joint event, Sheffield University Management School and the Graduate School of Business Administration in Kobe, Japan, held a workshop to discuss Japanese popular culture and management research, with a particular focus on manga.

Click here to read an article about the event.

Dr Mohammad Shaban discusses corporate finance for SMEs in Asia

In 2016, Dr Shaban was invited to speak conferences and meetings organised by the Asian Development Bank Institute and the Guangzhou Tianhe Central Business District Administrative Committee and the UK Department for International Trade.

Click here to read an article about his activities.

Dr Juliana Meira: SCA-Emp Toolkit – Improving HR and accounting practices in Brazil

In 2016, Dr Meira presented the Supply Chain Accounting- Employment Rights (SCA-Emp) Toolkit to organisations across Brazil, including in major cities such as Recife, São Paulo and Curitiba, as well as João Pessoa, São José dos Pinhais and Ponta Grossa.

Comment: What Africa can learn from Sheffield’s investment deal with China

Sheffield City Council and Sichuan Guodong Construction have agreed to a 60-year, £1bn partnership in the biggest Chinese investment deal outside of London.

The deal is seen as a sign as significant as UK's vote to leave the EU created uncertainty around China's future investments in the country. The council said the first £220m tranche of the money will fund four or five city-centre projects during the next three years, securing a “stream of investment” into the city for the next generation.

Click here to read the full article from Dr Sharif Khalid.

Comment: Lifetime ISA – there’s a big part of the ‘next generation’ it will do little for

The mission statement for the 2016 budget delivered by George Osborne is to “put the next generation first” – a group he referenced 18 times in his speech. The new lifetime ISA is fundamental to achieving this. Osborne touted it as “a completely new flexible way for the next generation to save”. But a closer look at the terms and conditions of the new ISA shows there are many it will not benefit.

Click here to read the full article.

Award: Leading accounting Professor honoured

Fourty-two leading social scientists have been conferred as Fellows of the Academy of Social Sciences, including Chair in Accounting and Finance and CRAFiC member Professor Josephine Maltby.

Fellows are drawn from across the spectrum of academia, practitioners, and policymakers and have been recognised after a process of peer review for the excellence and impact of their work in the social sciences. This includes thought leadership based on innovative research, the application of evidence for policy, the adoption of social science insights in practice and sustained advocacy that has improved the public understanding of issues where social science can make a contribution in higher education, government, and everyday life.

Josephine has an international reputation for her work on women as savers and investors and in the history of the accounting profession. Recent pieces for The Conversation have investigated savings history and charity finances.

The Academy of Social Sciences is Britain’s national academy of academics, learned societies and practitioners representing nearly 90,000 social scientists.

Comment: Accounting for Kids Company – why charities' books must add up

Professor Jospehine Maltby, chair in accounting and financial management, comments on financial management in charities. Originally published on The Conversation.

The collapse of the charity Kids Company has attracted a huge amount of attention – not least as a result of the drama involved. Investigations into what went wrong have brought forth stories of teenagers queuing up to pick up envelopes of money from the charity that they promptly spent on drugs.

Reports also emerged that the charity claimed its closure would lead to riots and attacks on government buildings. And transcripts can be read of a long and rowdy session of the public administration and constitutional affairs committee of MPs, which investigated the closure of the charity and took evidence from Camila Batmanghelidjh, Kids Company’s founder:

Camila Batmanghelidjh: I would like to ask you on what basis you have decided that this is a failing charity. Because if it is on the basis –
Chair: Because it has gone bust.

The less dramatic story, and the more worrying one, is about financial control in Kids Company and the value placed on financial literacy across the charity sector.

Kids Company produced annual accounts which it duly deposited with the Charity Commission, the charity regulator. It went through the proper audit process every quarter, every year – something Alan Yentob, chair of the charity’s trustees, frequently mentioned in his evidence to the MP inquiry. However, the fact that every year referred to Kids Company’s shortage of reserves, and potential cash flow problems, seems to have been outweighed by the copious data making claims for its successes.

Click here to read the full article.

Comment: If India is to replace China as a labour-intensive manufacturing hub, human capital has to be nurtured

Professor Sumon Bhaumik recently compiled a comment piece for The Hindu newspaper's 'Business Line' section:

Browsing Indian economic news on the internet and watching it on the television can be a surreal experience. Economic news in India is dominated by ups and downs in the share market, minutiae about winners and losers of changes in taxation rates and subsidy policies, visionary statements of people in power about India’s potential growth rate, to name some. Discussions about unemployment, which shapes debates about the state of the economy in the UK, my country of residence, are remarkably low-key.

There could be good reason for that. Perhaps — to quote Baba Ramdas of Three Idiots fame — “all is well”. After all, according to the World Bank, India’s 2010-14 unemployment rate is 3.6 per cent, much below the corresponding figures for the UK and most developed countries. Scratch the surface, however, and problems emerge.

Click here to read the full article.

Comment: Lessons from history: why the push for savings for all is wide of the mark, by Prof Josephine Maltby

Professor Jospehine Maltby, chair in accounting and financial management, comments on the government's call for saving and criticisms of the saving movement. Originally published on The Conversation.

As predicted the US Federal Reserve has raised interest rates after nearly a decade, which means a slightly better rate of return for savers. Meanwhile in the UK, the Bank of England has kept the benchmark rate at a rock-bottom 0.5% for the 81st month in a row. All the while there are calls from policymakers and politicians for a grand vision for saving. People should take responsibility, the argument goes, for their own welfare.

And the state needs them to believe it. Otherwise, it’s claimed, a combination of factors – longer life expectancy and financial illiteracy – will create an impossible burden.

UK pensions are currently undergoing an apparently endless set of reviews and alterations. The steady rise in the age of qualification for state pension, the chance to use pension savings as a bank account, and the introduction of auto-enrolment at all workplaces by 2018 are all aimed at increasing savings for retirement.

And there may be more to come. Both Iain Duncan Smith, the work and pensions minister, and the prime minister David Cameron, called for a rethink of social security – potentially a move to a system where people would “save from day one”, along the lines of Singapore’s Central Provident Fund. This would involve making mandatory deposits into a fund to be used as needed, in times of sickness or unemployment.

Click here to read the full article.

News: ‘Financial heroism’ and The Economist

The Economist has been published since 1843. It is one of the international financial journals currently the subject of “Economics in the Public Sphere” (ECONPUBLIC) a research project funded by the EU studying the creation and dissemination of economic knowledge in the USA, UK, France, Brazil and Argentina.

On 24-25 September, University College London, the UK partner in the project, held a workshop looking forward to 175 Years of The Economist, attended by international delegates including four of the journal’s five editors from 1974 to today.

Sheffield University Management School’s Prof Josephine Maltby (pictured above, with wartime adverts relating to the research), with Janette Rutterford from the Open University, presented their paper looking at the role of The Economist 1914-1918. Its 1914 editor, Hirst, who called the war ‘the triumph of… force over reason, of brutality over humanity’ was dismissed in 1916 for being ‘distressingly pacifist’. Hartley Withers, who replaced him, advocated ‘financial heroism’ in the form of patriotic self-denial and support for the war effort in the form of War Loan and War savings. But Withers became less and less enthusiastic about government policy – he began to point out that whilst the workers were funding the war effort, the wealthy (and the companies profiting from armaments and military supplies) were having an easier time, ‘gently handled’ by British taxation policies. His criticisms can be contrasted with the tone taken in Germany, where the wartime press was consistently positive about the success of the national financial effort.

Feedback at the workshop was positive – Prof Maltby and her collaborator are currently building it into a revised paper which will look in more detail at the parallels and differences between British and German finance in wartime.

Click here to read the paper.

News: From Sheffield to Kobe – Dr Naoko Komori kick-starts potential partnership

Dr Naoko Komori, lecturer in accounting at the Management School, has recently returned from Kobe University’s Graduate School of Business Administration where she was invited to deliver a lecture to young Japanese academics.

She presented a talk, titled ‘From Kobe to Sheffield: Developing Academic Careers in the Age of Globalisation’, to a diverse audience including doctoral students, academics from different Japanese universities, and senior professors engaging in an international entrepreneurial project. On her trip to Kobe University, Dr Komori said: “It was an honour to talk to such a welcoming audience at one of the top three business schools in Japan.”

Her talk included the significance of develop academic career in an international context, drawing on her own working experiences both in Japan and the UK. She also had a meeting with Professor Katsuhiko Kokubu, Dean of Kobe University’s Graduate School of Business Administration, and Professor Hirofumi Matsuo, the Director of the Strategic Entrepreneurship and Sustainability Alliance Management Initiative (SESAMI) to discuss about the possibility for building up partnership with Sheffield University Management School.

Dr Komori also received glowing feedback following her visit: “People who attended the talk were very complimentary, and it’s inspiring to learn that my work and career are considered pioneering amongst Japanese academics.”

A female associate professor who attended the talk commented: “We respect and are very impressed that Dr Komori started her academic career in the UK when publication in international academic journals was not common.”

Professor Katsuhiko Kokubu said: “We are thankful to Dr Komori for her enthusiasm in bridging the two schools, and for her talk that inspired our students to follow her path.”

For the latest publication on which her talk was based, click here.

Comment: What happened to savings for the future? By Prof Josephine Maltby

Josephine Maltby, Professor of Accounting and Financial Management at Sheffield University Management School and CRAFiC member, comments on the savings culture.

What happened to savings for the future?

This year has seen a series of reports about likely pensions shortfalls and the urgent need to increase savings.

As recently highlighted by Katie Evans and Emran Mian in Savings in the Balance 2014, apart from a brief recovery in the mid 2000s the UK savings as a percentage of household income have fallen between 1997 and 2014. In a survey which reveals savings as a percentage of GDP, the UK came next to the bottom with 10 per cent of GDP going into savings – only Greece doing worse.

This is treated by commentators as a 21st century crisis. But these worries are nothing new and it seems the anxieties about tightening the purse strings have been prevalent since the 19th century.

Read the full article here.

Comment: Bonuses influence where bankers go but it’s not all about pay, by Prof Sumon Bhaumik

Sumon Bhaumik, Professor of Finance at Sheffield University Management School and co-director of CRAFiC, comments on bankers' bonuses and the talent market. Originally published on The Conversation.

The UK has given up on challenging the European Court of Justice over its cap on banker bonuses. The cap that’s in place restricts bonuses to 100% of banker’s pay or 200% with shareholder approval. And there are now fears that this will undermine London’s status as a financial hub.

A key argument made for scrapping the cap is that it will drive talent elsewhere and this will put European banks at a disadvantage when it comes to attracting the best talent. In other words, it is argued that there is a market for managerial talent and that banks competing for talented managers must pay the market price for their services. But the relationship between offering big bonuses and attracting talent is a complex one.

Read the full article here.