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    Loss of production and animal health costs in assessing economic burden of animal disease.
    (World Organisation for Animal Health, 2024-08) Marsh TL; Pendell D; Schrobback P; Shakil G; Tozer P; Rushton J; Cecchini M
    This article focuses on identifying the loss of production and costs (or lack thereof) associated with livestock health as well as animal disease externalities, with the intent to estimate economy-wide burden. It limits its scope to terrestrial livestock and aquaculture, wherein economic burden is predominately determined by market forces. Losses and costs are delineated into both direct losses and costs and indirect losses and costs, as well as ex post costs and ex ante costs. These costs include not only private expenditures but also public expenditures related to the prevention of, treatment of, and response to livestock disease. This distinction is important because a primary role of government is to mitigate externalities. The article then discusses market impacts and investments. Finally, it provides selected examples and illustrative observations and discusses future directions for research and application. Cet article examine les pertes de production et les coûts associés (ou non) à la santé animale ainsi que les externalités liées aux maladies animales, dans le but d’estimer le fardeau pour l’ensemble de l’économie. L’examen se limite à la production d’animaux terrestres et aquatiques, secteurs où le fardeau économique est principalement déterminé par les forces du marché. Les pertes et les coûts sont répartis en pertes et coûts directs et indirects, ainsi qu’en coûts ex post et ex ante. Ces coûts comprennent non seulement les dépenses privées, mais aussi les dépenses publiques liées à la prévention, au traitement et aux réponses aux maladies des animaux d’élevage. Il s’agit d’une distinction importante car l’une des fonctions premières d’un gouvernement est d’atténuer les externalités. Les auteurs examinent ensuite les impacts sur les marchés et les investissements. Pour conclure, à partir d’exemples choisis et d’observations illustrant leur propos, les auteurs proposent des voies d’exploration pour la recherche et ses applications.
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    The impact of residential property investors on house price escalation in Auckland, New Zealand : research report in fulfillment of the requirements for Doctor of Philosophy in Property, School of Economics and Finance, Massey University, New Zealand
    (Massey University, 2024-07-24) White, David Jon
    Affordability and home ownership in Auckland New Zealand has been in decline over the past decade. Since the Global Financial Crisis in 2008, house affordability has decreased at an unprecedented rate, largely attributed to house price escalation with some mitigation from wage growth and interest rate decreases. The decline in the affordability of owner-occupation compared to renting has been particularly pronounced in Auckland and this has led to a decline in home ownership and political interest in the role of investors that could contribute to price escalation. This perceived role of investors has resulted in policy changes aimed at discouraging speculation. This research investigates the pricing decisions of investors in the Auckland housing market and the link to house price escalation and affordability of housing. This research investigates whether this sustained escalation in prices can be explained by bounded rationality in pricing decisions by comparison to a normative model. The methodology adopted is a mix of qualitative and quantitative methods. Qualitative methods are used to gather the stated preference of investors in relation to their investment motivations and pricing decisions was obtained via structured interviews with investors and institutional influencers, with reference to behavioural economic concepts and frameworks. Quantitative methods are used to quantify at the aggregate market level the deviation from normative pricing, and to quantify for explanatory purposes those components of pricing decisions that contribute to overpricing, using the user-cost equilibrium model. It is concluded that investors are inclined to over-price houses compared to what is predicted by a normative model, largely due to an over-estimation of capital gain expectations and an under-estimation of systemic risks. This over-estimation of capital gain expectation is self-reinforcing and leads to sustained over-pricing which influences the market in aggregate and therefore house price escalation.
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    Cost estimation model for earthquake damage repair in New Zealand : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Construction at Massey University, Albany, New Zealand
    (Massey University, 2021) Kahandawa Appuhamillage, Ravindu Visal Dharmasena Kahandawa
    Earthquakes are natural hazards that can devastate nations, their people and the surrounding built environments. Designing a suitable strategy for rapid recovery requires an accurate damage assessment process for the built environment. Loss estimation models were developed to predict the cost of repair, but these models were not used to estimate the costs of post-earthquake repair. This could be due to the fact that these probability-based models tend to provide less accurate outputs. In fact, there is no existing literature on post-earthquake repair cost estimation models that can rapidly produce repair cost estimates. This research developed a post-earthquake cost estimation model for earthquake damage repair work (referred to as a cost of damage repair, earthquake estimation model or C-DREEM). The research used an exploratory sequential research design that used semi-structured interviews (N=19) with engineers, quantity surveyors and builders with experience in earthquake damage repair work as the primary data collection. Then a web-based survey questionnaire (N=310 distributed, N=92 received) of professionals with experience in cost estimation for earthquake damage repair work was the second data collection. The collected data was analysed using thematic analysis, descriptive statistics and non-parametric tests. Based on the findings in the literature, document review and research data analysis, a cost of damage repair earthquake estimation model (C-DREEM) was developed. The C-DREEM model was then validated through a focus group interview session with participants who had experience in the cost estimation for earthquake damage repair work in New Zealand (N=9). Key findings identified from the research were: (i) 11 factors have a critical impact on the accuracy of cost estimation of earthquake damage repair work (CEEDRW) which includes consequential damage, initially unforeseen damage, and changes to the final repair state; (ii) Use of a unit rate and lump sum amount methods were some of the most suitable ways incorporate these factors to CEEDRW; (iii) detailed damage evaluation reports are the most likely information sources post-earthquake for CEEDRW; and (iv) the standardised and automated cost estimation model, C-DREEM, developed by this research can improve both pre and post-earthquake CEEDRW process with include the benefits of sharing consequence functions and probable damage information with probability-based methods. The key contribution to knowledge from this research is identifying the factors affecting CEEDRW, evaluating the significance, selecting methods to incorporate the factors into the costing process, and creating the C-DREEM costing process that combines the pre-and post-earthquake loss estimation processes. The research also supports the professional practice by providing: a standardised and automated cost estimation process; specifying the areas that should be improved, such as the damage reporting process; and a better cost control and monitoring process through standardised rates. Through the findings of the research, government and insurance companies: can standardise and improve the accuracy and speed CEEDRW process, and makes informed decisions to manage the impact of the eleven factors affecting CEEDRW identified by this research.
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    Determinants and consequence of cost stickiness : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University, Auckland, New Zealand
    (Massey University, 2020) Costa, Mabel D
    This research investigates the determinants and consequence of cost stickiness using data of publicly listed U.S. firms. Understanding the determinants of cost stickiness and its implications is extremely crucial, since it affects firms’ profitability, consequently, shareholders’ wealth. Moreover, cost management has even wider repercussions for both debt and equity investors in the areas of risk assessment and the trust of customers, employees, and other stakeholders in the community. Therefore, this study is organised into three different research essays: (i) financial constraint and cost stickiness; (ii) trade credit and cost stickiness; and (iii) cost stickiness and firm value. Essay One investigates the association between financial constraints and cost stickiness. Using a large U.S. sample from 1976 to 2016, I find that financially constrained firms exhibit less cost stickiness. I document that such low-cost stickiness supports both “good” and “bad” arguments depending on the managerial motivation, namely: earnings management incentives, agency problem and value-creating potential of SG&A costs. I also investigate whether the association between financial constraints and cost stickiness varies across the economic cycle. I find that low cost stickiness is observed during both economic expansion and economic contraction periods, although it is more pronounced during contraction. As resources drive the cost of a business, and financial constraints affect resource availability, studying cost behaviour of constrained firms makes a valuable contribution to the existing cost stickiness literature. In Essay Two, I examine the relation between trade credit and cost stickiness and further investigate the moderating effects of agency problem, product market competition, and customer concentration. I find that firms using high levels of trade credit exhibit lower cost stickiness and this is prevalent in the high agency problem sub-sample. In addition, in a non-competitive market, where the agency problem arises owing to lack of competition, trade credit plays an external monitoring role by attenuating cost stickiness. However, high customer concentration curtails this monitoring ability of trade credit providers. Finally, in Essay Three, I investigate the association between cost stickiness and firm value, and examine whether the association, if any, is mediated by cost of equity capital and cash flows. Using a large sample of U.S. data, I find a robust negative relationship between cost stickiness and firm value. I then explore whether resource adjustment, managerial expectations, and agency theories of cost stickiness affect the negative relation, and find some support for the agency view. Furthermore, I find evidence that the detrimental impact of cost stickiness on firm value is mediated partially through the cost of equity and cash flow channels. I enrich the cost management literature by integrating cost asymmetry with corporate finance.
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    Essays on the information-usefulness of changes in fair values to investors and debtholders, and its effect on audit fees : evidence from Australian real estate industry : a thesis presented in partial fulfilment of the requirements for the Degree of Doctor of Philosophy in Accountancy at Massey University, Auckland, New Zealand
    (Massey University, 2019) Sangchan, Pinprapa
    This research investigates the decision usefulness of changes in fair value (hereafter, CFV) of investment property reported under IAS 40 and IFRS 13 to capital providers (i.e., equity investors and debtholders), using Australian Real Estate Industry data.¹ The motivation for this study stems from the ongoing debate on the beneficial effects of fair value reporting and their associated reliability trade-off (Barth, 2018; Power, 2010). This research further investigates the effect of change in fair value (CFV) of investment property on the monitoring cost proxied by audit fees in order to picture the pros and cons of the subjectivity involved in the fair value accounting-model. The alert issued by the International Auditing and Assurance Standards Board (IAASB) to discuss challenges in auditing fair value accounting estimates, and inconsistent evidence on the effect of the fair value application on audit fees motivate me to study the association between fair value application and monitoring cost. The decision usefulness of CFV study and the effect of fair value reporting on audit fees are organised into three different research essays: (i) value relevance of CFV and measurement-related fair value disclosure to equity investors; (ii) the decision usefulness of CFV and cost of debt; and (iii) fair value exposure, CFV, and audit fees. Essay One investigates the value-relevance of changes in fair values of investment property recorded under IAS 40 and IFRS 13. Using hand-collected data from the Australian Real Estate Industry, I find that changes in fair values of investment property are value-relevant for equity investors. I further find that the use of unobservable inputs in an active market (Level 3 inputs) does not diminish the fair value information content. I document that properties valued exclusively by directors have a significantly reduced value-relevance for their value changes, whereas property valuations made collectively by both directors and independent valuers have superior value relevance, possibly owing to the combination of inside knowledge and externally imposed monitoring. Collectively, the findings suggest that, in the real estate industry, where unobservable inputs are commonly used to determine fair values of properties, the fair values determined subjectively are perceived to be sufficiently informative and relevant. My findings have important implications for accounting standard-setters in considering whether an external valuation should be required and whether the extensive measurement-related fair value disclosure requirements are useful. Essay Two examines the decision usefulness of CFV of investment property reported under IAS 40 and IFRS 13 to debtholders. Using hand-collected data, the findings suggest that CFV of investment property lowers the cost of debt, implying that the fair value information is decision-useful to debtholders. The effect is more pronounced when the CFV is recognised as a gain. The results further suggest that unobservable inputs used for fair value measurement in an active market (Level 3 inputs) do not necessarily damage fair value information content. I also document that using the stand-alone director valuation in fair value estimates for investment properties diminish the information content of such fair value changes, even though director valuation is insightful in terms of asset-specific knowledge. In addition, I report that an extensive fair value measurement-related disclosure does not enhance the information content of fair value changes. Collectively, the findings suggest that in the real estate industry, where unobservable inputs are predominantly used to measure fair values of properties, debtholders view fair values sufficiently faithful and decision useful. Essay Three investigates the relationship between audit fees and both fair value exposure (the proportion of investment property to total assets), and changes in fair value, of investment properties. This study is motivated by the limited and inconclusive evidence on the effect on audit fees of full fair value reporting for illiquid assets. Using hand-collected data from the Australian real estate industry, I find a negative (positive) association between audit fees and fair value exposure (changes in fair values of investment properties). Findings also indicate that the use of unobservable inputs in fair value estimates for investment properties does not significantly increase audit risk and audit fees. Further, I find that audit fees are higher for firms having fair values of investment properties estimated by external and mixed valuers, compared to firms having fair values estimated by directors alone. This study enriches the audit fee literature by documenting auditors’ pricing decisions in an area that involves significant estimation and valuation risks. ¹ Decision-usefulness versus information usefulness are used interchangeably in this thesis.
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    Building development cost drivers in the New Zealand construction industry : a multilevel analysis of the causal relationships : a thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy (PhD) in Construction, School of Engineering & Advanced Technology, Massey University, Albany, New Zealand
    (Massey University, 2018) Zhao, Linlin
    Building development cost is influenced by a raft of complex factors which range from project characteristics to the operating environment and external dynamics. It is not yet clearly understood how these factors interact with each other and individually to influence building cost. This gap in knowledge has resulted in inaccuracies in estimates, improper cost management and control, and poor project cost performance. This study aims to bridge the knowledge gap by developing and validating a multilevel model of the key drivers of building development cost (BDC) and their causal relationships. Based on literature insights and feedback from a survey of industry practitioners, some hypotheses were put forward in regards to the causal relationships between the BDC and the following key drivers as latent constructs: project component costs factor, project characteristics factor, project stakeholders’ influences factor, property market and construction industry factor, statutory and regulatory factor, national and global dynamics, and socio-economic factor. Observed indicators of the model's latent constructs were identified and measured using a mixed methods research design. Results showed that property market and construction industry factor was the most significant predictor of building development cost in New Zealand, while project component cost factor has the least impact. The model’s fit to the empirical dataset, and its predictive reliability, was validated using structural equation modelling. Results of an additional model validation test by a panel of experts further confirmed its efficacy. Overall, the results suggest that sole reliance on the immediate project component costs without due consideration of the wider and more influencing effects of the external factors could result in inaccurate estimates of building development cost. Key recommendations included addressing the priority observed indicators of the most significant latent variables in cost studies and analysis. Keywords: Building development cost, cost drivers, cost modelling, cost prediction
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    The cost and trade impacts of environmental regulations : effluent control and the New Zealand dairy sector : a thesis presented in partial fulfilment of the requirements for the degree of Master of Applied Economics at Massey University
    (Massey University, 1999) Cassells, Susan Mary
    This thesis investigates the impacts of current water quality regulations on the New Zealand dairy sector. The dairy industry is expanding, with dairy exports constituting 20% of total merchandise trade receipts. In recent years however, concern has grown in New Zealand and worldwide, regarding the negative environmental impact of intensive dairying, in particular the nitrate levels in ground and surface waters. In New Zealand both the protection of the environment, and trade are important for the economy. This research looks at the possible effects of increased on-farm costs on the competitiveness of the New Zealand dairy sector in the international market. In response to the Resource Management Act 1991, Regional Councils throughout New Zealand have required dairy farmers to operate a land-based disposal system for dairy shed effluent. An estimate is made of the additional cost this imposes on dairy farmers. An applied general equilibrium approach (GTAP) is used to analyse the possible impacts of these additional production costs on New Zealand's dairy export trade. This analysis is conducted under two scenarios, the first being that New Zealand acts unilaterally in imposing water quality regulations. The second scenario assumes that New Zealand's three main dairy export competitors, the EU, Australia and the US also enforce their own water quality regulations and internalise the costs of such regulations. The cost to the dairy farmer of implementing a land-haved effluent disposal system in order to meet water quality regulations is estimated at 2 to 3.2% of total farm costs. In the first scenario, given this increase in costs, the model predicts a loss in international competitiveness for the New Zealand dairy exporting sector. Under the second scenario, the global dairy export price index is predicted to rise by considerably more than the increase in the supply price of New Zealand's processed dairy products. This will mean a realignment of international trading patterns and an expansion of the New Zealand dairy exporting sector, thereby increasing its global market share.
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    The development of a decision support system for energy cost management, using an expert system shell : a case study in the integrated use of software packages : report presented in fulfilment of the thesis requirements for the degree of Master of Technology (Computing Technology)
    (Massey University, 1989) Robertson, L J
    The theory of minimizing total energy usage is well known (if not well documented), and the techniques are widely practiced. Because of the way in which energy is sold, the total cost incurred may be affected even more strongly by the time-distribution of the energy usage, than by the total quantity used. A major subject of ECM is the MANAGEMENT of this time-distribution of energy usage, with the objective of minimizing of total energy costs to the user. A software package (named ECMES, Energy Cost Management Expert System) has been developed using the Lotus Symphony integrated spreadsheet software package. The ECMES application consists (currently) of three modules offering analyses of several aspects of electrical energy cost management (plus three corresponding modules for gas costs, which are not considered further). The Symphony ECM application modules have been developed over the last few years, largely on a spare time basis, by Professor W Monteith of Massey University's Production Technology Department. The analysis of Energy Cost Management on a PC is one which requires functions supplied by several standard software packages, particularly spreadsheet, graphics, database and expert system. The relatively recent availability of moderately priced and user-friendly expert system development packages has brought an additional set of powerful tools within the reach of the application developer. A Decision Support System (using an Expert System shell) has been developed, which is well integrated with the spreadsheet data, and with a database, to expand the functions of the original spreadsheet ECM analysis tool. Theoretical work on the data requirements and the production rules has opened up possibilities for future work.