How well do investors understand loss persistence?

This paper examines investors’ expectations of loss persistence. I develop a model to forecast loss firms’ future earnings based on Joos and Plesko, The Accounting Review 80: 847–870, (2005). This model produces smaller forecast errors than two random walk models and a model that assumes losses are transitory. The results suggest that investors do not fully distinguish the differences in loss persistence captured by the model and instead appear to assume that all losses are transitory. Consequently, investors are surprised by future announcements of negative earnings for firms with predicted persistent losses, and these firms experience significantly negative abnormal returns over the following four quarters. Additional results indicate that the future negative returns of firms with predicted persistent losses are smaller in magnitude when these firms are followed by analysts. The results are robust to controls for various price anomalies and are not driven by short sale constraints.     

Looking Ahead: Opportunities and Challenges for U.S. Manufacturers

Manufacturing has received increased attention in recent years, as it has enhanced its importance in the economy with output and employment gains and as a driving force of U.S. exports. Nonetheless, the sector faces serious challenges as well as opportunities. The challenges are weak global economic growth, burdensome taxes and regulation, and a labor force that is unprepared to meet twenty-first century needs. Opportunities, however, are likely to more than offset the challenges. These are an improving energy environment, an improved climate for international trade, strong productivity growth, and continued strength in innovation.     

The Impact of No-Fault Legislation on Automobile Insurance

Abstract

Since its inception, the effectiveness of no-fault legislation has been highly debated. Although some research suggests that no-fault laws are effective in reducing costs, other evidence suggests that the current no-fault systems may not meet the original objectives. This study provides a detailed assessment of the relation of no-fault laws and automobile insurance losses for the period 1994 to 2007. By examining total automobile insurance losses along with liability and personal injury protection losses, we are able to determine if and how specific provisions of the laws are related to claims costs. We find a negative relation between the presence of a no-fault law and total losses, which suggests that no-fault systems are associated with lower losses than the traditional tort system. In addition, an examination of no-fault-only states suggests that specific provisions of no-fault laws, such as thresholds and limitations on benefits, have some effect on losses. With the sunset of Colorado’s no-fault legislation in 2003, the recent passage of Personal Injury Protection Reform in Florida, and proposed federal choice legislation, the overall impact of no-fault as well as the specific components of the laws are of heightened importance to consumers, insurers, and lawmakers.     

Cost-effectiveness of rivaroxaban compared with enoxaparin plus a vitamin K antagonist for the treatment of venous thromboembolism

Background:

Venous thromboembolism (VTE), comprised of deep vein thrombosis (DVT) and pulmonary embolism (PE), is commonly treated with a low-molecular-weight heparin such as enoxaparin plus a vitamin K antagonist (VKA) to prevent recurrence. Administration of enoxaparin?+?VKA is hampered by complexities of laboratory monitoring and frequent dose adjustments. Rivaroxaban, an orally administered anticoagulant, has been compared with enoxaparin?+?VKA in the EINSTEIN trials. The objective was to evaluate the cost-effectiveness of rivaroxaban compared with enoxaparin?+?VKA as anticoagulation treatment for acute, symptomatic, objectively-confirmed DVT or PE.

Methods:

A Markov model was built to evaluate the costs, quality-adjusted life-years (QALYs), and incremental cost-effectiveness ratios associated with rivaroxaban compared to enoxaparin?+?VKA in adult patients treated for acute DVT or PE. All patients entered the model in the ‘on-treatment’ state upon commencement of oral rivaroxaban or enoxaparin?+?VKA for 3, 6, or 12 months. Transition probabilities were obtained from the EINSTEIN trials during treatment and published literature after treatment. A 3-month cycle length, US payer perspective ($2012), 5-year time horizon and a 3% annual discount rate were used.

Results:

Treatment with rivaroxaban cost $2,448 per-patient less and was associated with 0.0058 more QALYs compared with enoxaparin?+?VKA, making it a dominant economic strategy. Upon one-way sensitivity analysis, the model’s results were sensitive to the reduction in index VTE hospitalization length-of-stay associated with rivaroxaban compared with enoxaparin?+?VKA. At a willingness-to-pay threshold of $50,000/QALY, probabilistic sensitivity analysis showed rivaroxaban to be cost-effective compared with enoxaparin?+?VKA approximately 76% of the time.

Limitations:

The model did not account for the benefits associated with an oral and minimally invasive administration of rivaroxaban. ‘Real-world’ applicability is limited because data from the EINSTEIN trials were used in the model. Also, resource utilization and costs were based on the US healthcare system.

Conclusion:

Rivaroxaban is a cost-effective option for anticoagulation treatment of acute VTE patients.     

An examination of the nature of the relationship between Leader-Member-Exchange (LMX) and turnover intent at different organizational levels

The present study investigates the nature of the relationship between Leader-Member-Exchange (LMX) quality and turnover intent in the South Korean hospitality industry. Self-administered survey questionnaires were collected from 232 frontline workers as well as 88 supervisors employed in hotel properties. Prior research has produced mixed results, finding linear relationships between LMX quality and turnover intent in some studies and non-linear relationships in others. Traditional hierarchical regression analyses were performed to test the nature of the relationship in these two samples. We found evidence for a U-shaped curvilinear relationship between LMX and turnover intent for non-supervisory employees, but only a linear relationship for supervisory employees. Conceptual and practical implications and recommendations for future research are provided.     

Does mandatory food safety training and certification for restaurant employees improve inspection outcomes?

The purpose of this study was to explore the relationship between mandatory food safety training and certification and inspection results of chain restaurants and independent restaurants, using current food safety inspection results of food service establishments in Central Florida. More specifically, this study examines whether there is any statistically significant difference in the violation frequency among chain and independent restaurants. Reducing the risk of any foodborne illness is a critical strategy that industry stakeholders should pursue in an area dominated by tourism such as Orlando, Florida. A one-way ANOVA was used to determine the differences between the two types of restaurants. Findings indicate that there is significant difference between chain and independent restaurants for critical violations. No difference was found when comparing chain verses independent restaurants for non-critical violations.     

Mobile Cultures? Hybridity,Tourism and Cultural Change

This paper addresses the problem of cultural change in relation to tourism. It will be argued that tourism research has tended to be theorised in terms of static models predicated on the assumptions of unilinear development, and cultural change being accounted for by a shift from one defined state into another. Beginning with a critique of the 'container model' of culture, this paper then draws on recent anthropological and sociological developments concerned with globalisation to critically examine the utility of the concept of hybridity. In conclusion, this paper will argue that what is required is a transformative and processual approach that is capable of accounting for the dynamic interplay of cultural change at both a micro and macro level.     

The influence of the precautionary principle on science-based decision-making: questionable applications to risks of radiofrequency fields

The precautionary principle, recognized by the European Commission as a 'full-fledged and general principle of international law,' has been advanced as a paradigm for response to potential risks to the environment or health when scientific data are uncertain. But lacking the elements and operational qualities that characterize principles that have proven useful in law, politics, science, and ethics, the precautionary principle lends itself to regulation based on the perception of a threat or fear itself. In the absence of scientific evidence for risk, recent application of the precautionary principle to questions about radiofrequency electromagnetic fields of cellular telephones and cellular telephone base stations has produced wasteful and misguided regulations and questionable advice to the public. The formation of scientific 'fire brigades' is suggested for rapid acquisition of targeted scientific data needed so that precautionary policies on technologically driven issues can be based on quantitative risk assessment.