Debate: Society,socialism, sociology

This article investigates the implementation of benchmarking in three large acute NHS trusts. The findings concentrate on the attitudes of professional groups towards the preparation and use of management accounting information for performance measurement and comparison in NHS trusts. The problems revealed in developing appropriate costing information in this organizational context suggest difficulties lie ahead as more far-reaching organizational and financial change permeates the NHS.     

Stockholding: Participation, location, and spillovers

This paper provides the first joint analysis of household stockholding participation, location among stockholding modes, and participation spillovers. Our model matches observed participation, conditional and unconditional, and asset location patterns. We find that financial sophistication correlates strongly only with direct stockholding and mutual fund participation, while social interactions mainly influence stockholding through retirement accounts. Whether retirement account owners include stocks in their accounts strongly depends on owner characteristics, which is not the case with mutual fund owners and investment in stock funds. Stockholding is more common among retirement account owners, but mainly because of owner characteristics rather than of any participation spillovers from retirement account ownership.     

Dividends: Relevance,rigidity, and signaling

This paper uses a dynamic partial equilibrium model to explain a puzzle of dividend smoothing. In contrast to the Modigliani–Miller theory, I show that firm value depends on payout policy. The analysis implies that firms with more stable dividend stream are more valuable. This explains why dividends are rigid over time. A volatile component of dividends is introduced to reduce the likelihood of dividend omission in bad times while keeping the same historical average dividends. I show that the empirically observed positive relation between dividends and future firm performance is a statistical artifact driven by dividend smoothing. Thus, the empirical tests of dividend signaling theory might be misspecified.     

Futures India: society, nation-state, civilisation

The future of a phenomenon can only be understood in terms of (a) the conceptual construction one makes of it and (b) the changes in empirical content of that phenomenon. In turn, the empirical reality ought to be discerned in terms of the past-present-future dialectic. Keeping this in view, this paper begins with conceptual clarifications of the terms society, nation-state and civilization and situates India in terms of these notions. It is suggested that India’s future as a society and as a civilisation is durable although some changes in their content are inevitable. But as a ‘nation-state’ India may radically change given the contestations about it. Four competing value-orientations—cultural monism, cultural pluralism, cultural federalism and cultural subalternism—about the contemporary Indian nation-state have been identified. India’s future as a nation-state will depend upon the legitimacy these value orientations achieve in future.     

Outperformance Certificates: analysis, pricing, interpretation, and performance

In this paper we introduce a new financial product named Outperformance Certificates. We study the €43 billion sample by examining 1,507 issues of the certificates outstanding in August 2005 issued by banks in Europe. We present formulas to price the certificates and empirically examine the profits in the primary market for issuing the certificates. We find that issuance of the certificates is profitable for the issuers in our sample. Issuers sell the certificate at prices 3–5 % above the fair value based upon the components of the underlying assets. We also find that the dividend yields and ex-dividend dates play an important role in the profitability of the certificates. The underlying securities tend to have high dividend yield and large market capitalization. We also find the certificates tend to mature soon after the ex-dividend dates of the underlying assets.     

Paradigm,paradox, paralysis: An epistemic process

The potential of the transformative capacity of education requires critique of a dominant paradigm, in order to apprehend the unconscious acceptance of capital markets as solutions to societies’ woes. We engaged with media texts as practicum which advocated carbon markets to mitigate carbon pollution: a contemporary issues in society. We found that although we critique the dominant paradigms upheld by the media texts which we chose, our engagement had the potential to reinforce the status quo. Once this paradox is evident, it precipitates a paralysis of the educative process. However, this is not an end state but the struggle to overcome the paralysis mobilises a reconsideration of the paradigm and opens new possibilities. We argue that the collision of the concepts of paradigm, paradox and paralysis demonstrates an epistemic process which has emancipatory possibilities.     

Health care : Planning, policies, and incentives

In theory, health planning is a detailed and rational corporate attempt to handle broad social problems. But in practice it tends to be incremental—an institutionalised bargaining system which too often neglects the larger issues in favour of marginal adjustments. Mixed scanning, the detailed examination of selected, feasible proposals, combines the best features from theory and practice. Implementation still depends on the recognition of powerful interest groups (eg doctors, managers) and the inclusion of incentives to redirect their activities. Better planning does not guarantee better health—the influence of lifestyle and environment must not be neglected.     

Dividend Consistency: Rewards,Learning, and Expectations

The fact that many companies have a long track record of consistent dividend increases suggests that managers believe there is some benefit to establishing and maintaining such a pattern. Many companies, for example, follow a perennial policy of increasing the dividend in a particular quarter, maintaining it at the same level for the next three quarters, and then increasing it in the same quarter of the following year. But does the capital market reward companies for maintaining a consistent dividend policy? Do companies with a history of repeated dividend increases earn long‐term positive abnormal returns; and if so, how long do the returns persist? The authors find that companies earned significantly positive abnormal returns following each of the first five annual dividend increases, over and above the positive announcement‐month returns. Nevertheless, the reward decreases as the track record of dividend increases becomes longer. After the first dividend increase, companies enjoy significantly positive returns for the next two years. Companies that increase the dividend in the same quarter of the following year also enjoy significant positive returns, but returns that are smaller (and less statistically significant) than in the case of first‐time dividend increases. And as the dividend‐increase track record further lengthens, the size and statistical significance of the abnormal returns continues to shrink; and after the sixth dividend increase, the abnormal returns in the next twelve months are statistically indistinguishable from zero. In sum, although there is some support for maintaining a consistent dividend policy, the market response diminishes over time, and investors do not earn abnormal returns by buying stocks whose annual dividend has already been increased six or more times.     

SOUTH-SOUTH TRADE: Theory, Evidence, and Policy

Recently a number of commentators have argued that trade policyin developing countries should be deployed discriminatorilyto encourage the expansion of trade among southern countries.Such a strategy is seen as being central in the framing of anew international economic order. This article evaluates thearguments in favor of a relative expansion of South-South tradeand reviews the experience of developing countries with discriminatoryregional trading arrangements. It contends that the case forspecific policies to promote South-South trade is not convincingand that experience with discriminatory arrangements is notencouraging. The expansion of South-South trade can be expectedto continue in the context of multilateral trade expansion,and the potential gains are likely to be greater if this processis allowed to evolve freely in a multilateral setting.      

Risk Management: History,Definition, and Critique

The study of risk management began after World War II. Risk management has long been associated with the use of market insurance to protect individuals and companies from various losses associated with accidents. Other forms of risk management, alternatives to market insurance, surfaced during the 1950s when market insurance was perceived as very costly and incomplete for protection against pure risk. The use of derivatives as risk management instruments arose during the 1970s, and expanded rapidly during the 1980s, as companies intensified their financial risk management. International risk regulation began in the 1980s, and financial firms developed internal risk management models and capital calculation formulas to hedge against unanticipated risks and reduce regulatory capital. Concomitantly, governance of risk management became essential, integrated risk management was introduced, and the chief risk officer positions were created. Nonetheless, these regulations, governance rules, and risk management methods failed to prevent the financial crisis that began in 2007.     

Shareholder Value: Principles, Declarations, and Actions

This paper is about shareholder value. We examine whether welfare considerations justify that target and whether competitive markets force firms to pursue it. We also argue that shareholder value is strictly an ill-defined goal. We report evidence from a large sample of listed firms across the world that many managers do not even mention shareholders in their mission statements. However, firms that do disclose a commitment to shareholders seem to perform better in terms of stock price and operating performance.     

Corporate failures: Declines,collapses, and scandals

Numerous collapses and corporate scandals of large corporations have underscored the impact of corporate conduct on capital markets and society as a whole. These failures have highlighted the need for regulators to rethink regulatory frameworks and enforcement, and for corporations to rework their organizational structures and focus on business ethics. Establishing a clear understanding of the drivers of corporate failure is therefore key. In this paper, we review recent research that extends the debate on the causes and consequence of corporate failures.