Professional Perceptions of Bureaucratic Change in the Public Sector: GPs, Headteachers and Social Workers

Public sector organizations have undergone immense changes over the last two decades. Bureaucratic structures of governance have been reformed with the aim of promoting a more market-oriented approach, intended to improve efficiency and encourage greater responsiveness to the client. On the basis of interviews with senior managers and professionals, this article argues that the public sector is not in a state of 'post-bureaucracy' as claimed in some recent academic writing. Far from reducing bureaucratic tendencies, the reforms have created additional workloads, heightened the tensions surrounding the meeting of client needs and the management of resources and led to more, and not fewer, tiers of management.     

Reduced Form Mortgage Pricing as an Alternative to Option-Pricing Models

This paper extends the traditional hazard technique of estimating prepayment and default by allowing their baselines to be stochastic processes, rather than known paths of time, as is typically assumed. By working in the reduced form, this method offers an alternative to the empirical valuation of mortgages more easily implemented than the standard structural form approach of options pricing.     

Public Sector Outsourcing as an Exchange Option

The outsourcing of government activities is justified primarily by expected cost savings. In the formal process of determining whether there are potential savings from contracting out, public sector agencies in Australia are required by published government guidelines to measure the relevant costs of in-house activities and to compare these with external bids. Similar and in technical respects essentially identical requirements exist in Great Britain. The cost comparison methodology advocated in these various publications is deficient in that it makes no allowance for the financial value of the option to contract out. Like other options, the option to contract out provides a hedge against uncertainty, and is all the more valuable the more uncertain (less predictable) the agency's future costs of in-house and external service arrangements. In the face of inherently uncertain cost streams, there is something to be said for conserving all available options. By interpreting the option to contract out as a financial asset with theoretically measurable value, arguments for government agencies maintaining at least some in-house capabilities are given a basis in 'rational economics'.     

Break-Through Innovations and Continuous Improvement: Two Different Models of Innovative Processes in the Public Sector

How do we understand innovation in the public sector? A look at the public and private sector understanding of innovation helps us begin to see how important new ideas are born, nurtured, tested and disseminated.     

Evaluating an Alternative Risk Preference in Affine Term Structure Models

Dai and Singleton (2002) and Duffee (2002) show that there isa tension in affine term structure models between matching themean and the volatility of interest rates. This article examineswhether this tension can be solved by an alternative parametrizationof the price of risk. The empirical evidence suggests that,first, the examined parametrization is not sufficient to solvethe mean-volatility tension. Second, the usual result in theestimation of affine models, indicating that some of the statevariables are extremely persistent, may have been caused bythe lack of flexibility in the parametrization of the priceof risk.     

Securitization in Public Sector Finance

Already commonplace in the private sector, the securitization of future income streams is now being promoted in the public sector as a means of accessing investment capital. This article reports on a British university's securitization of 30 years' future rents on its student accommodation. Although the securitization made it possible to refurbish the residences, it has turned out to be costly in other respects. The authors conclude that investment returns in the public sector will rarely be sufficient to cover the finance costs of securitization; that the loss of the securitized income in labour-intensive public services is virtually certain to cost jobs; and that the accounting treatment of securitization needs to incorporate a realistic calculation of the movements in effective debt. Finally the article recommends that the value for money of any proposed public sector securitization should be independently checked by comparing its total cost of capital with the returns on its proposed uses.     

New Approaches in Reward: Their Relevance to the Public Sector

This article explains the concept of 'new' reward (for example variable pay, market-based pay, performance-related pay and team-based pay) and why recent UK governments have encouraged it. The extent and effectiveness of new pay practices in the public sector is investigated. The author concludes that the Government should not be pushing the public services to mimic what they perceive to be private sector reward practice.     

Engagement Research in Public Sector Accounting

Abstract: This paper argues for the value of engagement research in order to encourage public sector accounting academics to take such an approach. Given that there is little evidence about the practice or value of engagement research, however, we set out to explore, evaluate and establish the lessons learned from a specific episode of engagement research. In outlining a project carried out between 2003 and 2005 by Amanda Ball and Vernon Soare, which sought to promote sustainability reporting in public service organisations, we argue that this form of research may positively impact government, public policy, professional accounting institutions and others involved in regulating or otherwise standardising public sector accounting practice.     

Problems of Ethics in Public Sector Management

This article draws attention to some of the effects of new public management on questions of ethics. It does not argue that there was some past golden period when all was right in the context of public sector management but that it is important to consider how moral standards were appreciated and applied in official work in a previous period, how difficulties arose, what they were and how they were resolved. In the contemporary context it is important to understand what difficulties are currently arising, to ensure that the ethical dimensions of public sector work today are appreciated, and to suggest that new approaches should be considered if previous provisions are no longer adequate or practicable.     

Without `Reinventing the Wheel': Business Accounting Applied to the Public Sector

This article considers why a business accounting model was applied in an early adoption of public-sector accrual accounting. The history of that change shows that large private-sector consulting firms were active in the promotion and implementation of a commercial model of public-sector accrual accounting. It is argued here that the consulting firms' actions are best understood using concepts of mimetic isomorphism and the interplay between self-interest and perceived public interest. They formed an epistemic community in which self-interest was present but with a zealous belief that private-sector accounting was an inherently righteous objective for the public sector.     

SPACs: An Alternative Wav to Access the Public Markets

Lost amidst the news of the real estate crisis, soaring oil prices, undercapitalized banks, and falling stock prices is a trend that has been quietly building in the U.S. capital markets. Instead of doing traditional IPOs, companies are increasingly going public by merging with Special Purpose Acquisition Companies, commonly known as SPACs. SPACs are publicly traded pools of capital formed for the sole purpose of merging with an operating company. Since the beginning of 2007, they have raised nearly $16 billion in U.S. markets, capital that is now being channeled into billion dollar‐plus mergers. Hedge funds, which provide the bulk of this capital, invest in SPACs as a way to create a customized portfolio of securities that provide private equity‐like exposure but also liquidity and the right to vote on the proposed acquisition. Frequently formed by well‐known sponsors such as Thomas Hicks and Nelson Peltz, SPACs now feature prominently in corporate discussions of strategic options. Companies that consider merging with SPACs often face complicated circumstances, require a major recapitalization, operate in a niche sector that lacks an institutional following, or have no obvious strategic buyers. The author describes how SPACs, by means of privately‐negotiated, tailored transactions, provide companies with access to the public markets in ways that a traditional IPO often cannot. The article includes case studies of three companies in unusual circumstances that, instead of doing IPOs, established access to public markets by merging with a SPAC.     

Without 'Reinventing the Wheel': Business Accounting Applied to the Public Sector

This article considers why a business accounting model was applied in an early adoption of public-sector accrual accounting. The history of that change shows that large private-sector consulting firms were active in the promotion and implementation of a commercial model of public-sector accrual accounting. It is argued here that the consulting firms' actions are best understood using concepts of mimetic isomorphism and the interplay between self-interest and perceived public interest. They formed an epistemic community in which self-interest was present but with a zealous belief that private-sector accounting was an inherently righteous objective for the public sector.     

Performance Assessment of Public Sector Scientists

Publicly-funded scientific research establishments are complex organizations requiring considerable management skills to optimize performance. This article identifies the performance indicators (PIs) used in the appraisal of public sector science in the UK and assesses their relevance in relation to the Balanced Score Card (BSC) management tool. The author found that current PIs in UK science relate primarily to scientific peer-group interests and are unlikely, on their own, to facilitate the optimization of organizational management. The article also suggests how concentration on these PIs could hinder the implementation of government science policies, for example public understanding of science, and wealth creation.