Cash Flow Risk Management in the Property/Liability Insurance Industry: A Dynamic Factor Modeling Approach

This study proposes and demonstrates a dynamic factor model that can be empirically carried out by the utilization of a factor-augmented autoregressive technique to explain and forecast the time-varying patterns of cash flows of insurance companies in the United States. A principal component approach is employed in the Factor-Augmented Autoregressive Model (FAARM) to capture the augmented factors that are to be utilized for forecasting. We describe the cash flow statistical model by a dimension-reduction technique that can depict the dynamic patterns of the cash flows of insurance firms and then measure the FAARM model. Results from the first step (principal component analysis) help capture the macroeconomic variables and the variables pertaining to insurance companies' cash flows, namely, cash flows from investment, underwriting, and risk management activities. Results from the second step offer evidence supporting that the FAARM improves the out-of-sample forecasting accuracy assessed by a forecasted root-mean-squared error (FRMSE). This article presents a set of feasible FAAR models from which an insurance firm can choose one that can be a better fit to the firm corresponding to its specific firm characteristics, such as firm size. Consequently, the chosen FAARM(s) can improve the accuracy of cash flow forecasting and thus can help insurers to manage risk via cash-flow–matching techniques.     

Credible discovery,settlement, and negative expected value suits

We introduce discovery into a model of settlement and negative expected value (NEV) suits under asymmetric information. The option to conduct discovery has several important effects. First, because discovery is cheaper than litigation, it reduces the defendant's incentive to settle under asymmetric information. Second, discovery must be credible. Because discovery is more valuable the greater the uncertainty it resolves, this introduces a credibility constraint on pre‐discovery settlement offers. This can further reduce the probability and size of a defendant's pre‐discovery settlement offer. Lastly, discovery reduces the ability of NEV plaintiffs to use asymmetric information to extract significant settlements from defendants.     

How Leadership Characteristics Affect Organizational Decline and Downsizing

While studies have investigated the moral issue associated with downsizing, little research attention has been directed to leaders’ behaviors that result in organizational decline and eventually lead them to make a downsizing decision. This study tests a sequence-based model to assess (1) the impact of leaders’ risk-aversion and self-centeredness on organizational decline and downsizing and (2) the impact of organizational and industry decline on organizational downsizing. We address a gap in the decline literature that has only implicitly alluded to leadership characteristics as forerunners of decline. Data collected from 85 firms indicate that both leadership risk-aversion and self-centeredness are significantly related to organizational decline. This results in intensified organizational downsizing. However, industry decline affects downsizing more significantly.     

Electronic monitoring at work: The role of attitudes,functions, and perceived control for the acceptance of tracking technologies

Organisations increasingly adopt tracking technologies that allow managers to continuously collect highly detailed records of employee, performance, and health. On the basis of the theory of planned behaviour, we aim to identify attitudes, functions of monitoring, and control perceptions that should strengthen or lower employees' acceptance of these technologies. Our experimental vignette study among 800 respondents in Germany reveals that acceptance is more likely if employees have positive attitudes towards surveillance in general and towards monitoring in private life and if the technologies enhance labour productivity. The tendency to reject the technology increases if it is to be used for monitoring health and performance. The results indicate that these new technologies will not be accepted unconditionally and may be subject to bargaining and conflicts. In the implementation process, human resources departments will have to take account of employee interests and well‐being, which in turn may improve acceptance and performance.     

National burden of road traffic injuries in Argentina

More than 1.2 million people die and as many as 50 million people are injured or disabled due to road traffic injuries (RTIs) every year worldwide. The lack of reliable data hinders efforts to describe the characteristics of the issue and prioritise prevention activities. The objective was to provide a snapshot of fatal and non-fatal RTI in Argentina. We used the methodology proposed by the Global Burden of Disease Injury Expert group. External causes of deaths with unknown codes were proportionately redistributed over the known categories. In 2007 in Argentina, we estimated 5915 RTI deaths, compared with 3983 RTI deaths reported previously by the Ministry of Health, accounting for 1931 additional cases. The highest number of deaths occurred in young men (15-29 years old), although the highest RTI death rates were in the age group of 55 years and older. Four-wheeled vehicle occupants were the most common road user type killed (59.1%); vulnerable road users represented one third (29.5%) of deaths and 64% of non-fatal RTI. The national and regional estimates of RTI in Argentina should help policy makers and public-health researchers to understand the importance of RTI prevention and design specific interventions to further reduce these preventable deaths and injuries.     

On model ambiguity and money neutrality

We solve for the equilibrium of a stochastic neo-classical continuous time model without and with money under model ambiguity. We show that: (i) the correction for ambiguity stemming from the money supply is nil at equilibrium; (ii) money is neutral with respect to the stock market equilibrium (the equity risk premium); (iii) money is not neutral with respect to consumption and capital accumulation, and its effect may be quantitatively substantial; (iv) the preference for model robustness affects all the real economic variables as well as the expected inflation rate and the nominal interest rate.     

Linking capacities of high‐quality relationships to team learning and performance in service organizations

This study examines the impact of intrateam and external high‐quality relationships (HQRs) on learning processes and performance. Data collected from 178 teams in the service sector indicate that (a) intrateam HQRs (i.e., between team members and between team members and their manager) are related to psychological safety, which in turn facilitates learning processes; (b) external HQRs are associated directly with team learning; and (c) team learning is positively associated with enhanced team performance. The findings highlight the importance of both internal and external HQRs to facilitate learning and enhance performance in service organizations. © 2011 Wiley Periodicals, Inc.