Strategic Interaction between Governments and Investors under Privatization Programs

This article analyses the strategic moves of governments and investors under privatization programs in a game‐theoretic context. In sequential‐move games of both perfect information and incomplete information, the best response of the strategic investors to observing a slow pace of privatization is to have a low participation in economic activity because of concerns over public policy credibility. This is true even if the government chooses to randomize its action to send mixed signals to the investors while adopting a slow pace of privatization for budgetary reasons. However, the outcome is Pareto inferior to a situation of phased but fast implementation of privatization programs and high private‐sector participation under plausible assumptions. Copyright © 2011 John Wiley & Sons, Ltd.     

Endogenous Growth Models and Stock Market Development: Evidence from Four Countries

This paper re‐examines the relationship between stock market development and economic growth. It provides a theoretical basis for establishing the channel through which stock markets affect economic growth in the long run. It examines the hypothesis of endogenous growth models that financial development causes higher growth through its influence on the level of investment and its productivity. The empirical part of this study exploits techniques recently developed to test for causality in VARs. The evidence obtained from a sample of four countries suggests that investment productivity is the channel through which stock market development enhances the growth rate in the long run.     

Progressive stress accelerated life tests under finite mixture models

In this paper, progressive stress accelerated life tests are considered when the lifetime of a product under use condition follows a finite mixture of distributions. The experiment is performed when each of the components in the mixture follows a general class of distributions which includes, among others, the Weibull, compound Weibull, power function, Gompertz and compound Gompertz distributions. It is assumed that the scale parameter of each component satisfies the inverse power low, the progressive stress is directly proportional to time and the cumulative exposure model for the effect of changing stress holds. Based on type-I censoring, the maximum likelihood estimates (MLEs) of the parameters under consideration are obtained. A special attention is paid to a mixture of two Rayleigh components. Simulation results are carried out to study the precision of the MLEs and to obtain confidence intervals for the parameters involved.     

Banks’ non-traditional activities under regulatory changes: impact on risk,performance and capital adequacy

Using the big six Canadian chartered banks quarterly financial statements and daily stock market data from 1982 to 2018, we examine the impact of non-interest income on Canadian banks’ risk, performance and capital under the different major regulatory changes made to the Bank Act of Canada. Our results show that Canadian banks’ expansion into non-traditional activities had slightly decreased their risks and significantly improved their performance benefitting from income diversification. Moreover, while adhering to capital adequacy regulation, reshuffling banks’ portfolio towards non-traditional activities did not reduce Canadian banks’ capital ratio. In spite of the re-regulation towards universal banking against ring-fencing, this feature buttresses the effectiveness of capital adequacy regulation in Canada in linking banks capital allocation with their risk taking.     

Internal Control Weaknesses,Family Ownership and the Cost of Debt: Evidence from the Tunisian Stock Exchange

ABSTRACT

This study investigates the effect of internal control weaknesses (ICW) and family ownership on the cost of debt in the Tunisian setting. We document that ICW and family ownership are positively associated with the cost of debt. When testing for the moderating effect of family ownership on the association between ICW and the cost of debt, we document that the positive effect of ICW on the cost of debt is more pronounced under high family ownership in the Tunisian setting. Furthermore, the positive and significant association between ICW and the cost of debt is more prevailing for firms audited by non-Big 4 auditors and industrial companies. These findings may have policy implications for Tunisian policymakers with respect to the establishment of internal control standards.     

Does Accounting Treatment of Share‐based Payments Impact Performance Measures for Banks?

This paper identifies, evaluates and analyses the resulting impact of mandatory expensing of share‐based compensation (SBC) under IFRS2/FASB123R on a set of widely used performance measures in the EU and US banking industry. The paper shows that the accounting treatment of SBC schemes, following the mandatory adoption of IFRS2/FAS123R, has a statistically significant negative impact on the selected performance measures over the period 2004–11. The impact also seems to be material, yet modest, for US banks and only for large and high‐growth EU banks, indicating that earlier public concerns and criticisms of the implementation of IFRS2/FAS123R are largely unsubstantiated. The findings also show that banks continue to use SBC, but there is a reduction, albeit insignificant, in the recognised SBC expense over the period 2009–11. That is, earlier public concerns that firms would curtail employing SBC in their employees’ compensation schemes to avoid the effect of SBC expense recognition on their financial ratios came to light after the first option life‐cycle in the post‐adoption period was over. The findings also show a marked movement towards using cash‐settled‐based payments, possibly due to their manipulative accounting treatment, a potentially interesting issue for related accounting research and accounting standard setters.     

Is There a Trade-Off Between Accrual-Based and Real Earnings Management Activities in the Presence of (fe) Male Auditors?

Journal of Business Ethics - Prior research suggests that the presence of high-quality auditors (i.e. proxied by audit firm characteristics) constrains accrual-based earnings management, but it...     

A framework for analyzing flexibility of generic objects

Flexibility is a loosely defined term used in a number of application areas with different and frequently contradicting views. In this paper, adopting as a starting point the use of the term in the manufacturing and information systems domains, we present a framework for the examination of generic objects utilizing cloud diagrams. We first portray the potential flexibility of a designed object and then its actual flexibility expressing its ability to adapt to changes. Examples of its use illustrate the ideas and their application. We believe that this research will be helpful in offering guidelines to designers of new systems where flexibility is important.     

Budget impact analysis for dapagliflozin in type 2 diabetes in Egypt

Abstract

Introduction: Type 2 diabetes mellitus (T2DM) is a major health problem in Egypt with a high impact on morbidity, mortality, and healthcare resources. This study evaluated the budget impact and the long-term consequences of dapagliflozin versus other conventional medications, as monotherapy, from both the societal and health insurance perspectives in Egypt.

Methods: A static budget impact model was developed to estimate the financial consequences of adopting dapagliflozin on the healthcare payer budget. We measured the direct medical costs of dapagliflozin (new scenario) as monotherapy, compared to metformin, insulin, sulphonylurea, dipeptidyl peptidase-4 (DPP-4) inhibitors, thiazolidinedione, and repaglinide (old scenarios) over a time horizon of 3 years. Myocardial infarction (MI), ischemic stroke, hospitalization for heart failure (HHF), and initiation of renal replacement therapy (RRT) rates were captured from DECLARE TIMI 58 trial. One-way sensitivity analyses were conducted.

Results: The budget impact model estimated 2,053,908 patients eligible for treatment with dapagliflozin from a societal perspective and 1,207,698 patients from the health insurance (HI) perspective. The new scenario allows for an initial savings of EGP121 million in the first year, which increased to EGP243 and EGP365 million in the second and third years, respectively. The total cumulative savings from a societal perspective were estimated at EGP731 million. Dapagliflozin allows for savings of EGP71, EGP143, and EGP215 million in the first, second and third years respectively, from the HI perspective, with total cumulative savings of EGP430 million over the 3 years.

Conclusion: Treating T2DM patients using dapagliflozin instead of conventional medications, maximizes patients’ benefits and decreases total costs due to drug cost offsets from fewer cardiovascular and renal events. The adoption of dapagliflozin is a budget-saving treatment option, resulting in substantial population-level health gains due to reduced event rate and cost savings from the perspective of the national healthcare system.