The operating costs of taxation: a review of the research

This paper considers key aspects of the literature on the operating costs of taxation, identifying the factors that have led to its development and evaluating its impact on policy responses to compliance and administrative costs issues. It starts by identifying the key components of the operating costs of the taxation system. The paper then identifies the main research trends over the past 60 years or so around the world, placing current concerns about taxation compliance and administrative costs within a broader - deregulatory - context and analyzing governmental responses to concerns about compliance costs highlighted by the literature. Finally, it offers some tentative views on the likely directions that research in the area may take in the coming decades.     

Estimating the economic costs of organized crime by synthetic control methods

The economic costs of organized crime have been estimated for the case of southern Italy by Pinotti (Economic Journal 2015; 125, F203–F232, 2015): using synthetic control methods, he finds that, due to the advent of the Italian Mafia in the regions Apulia and Basilicata, GDP per capita dropped by 16%. Replicating this study in a narrow sense by estimating the same model with the same data, but using different software implementations, we observe minor differences stemming from the different implementations. By identifying the correct implementation, we find that the loss in GDP per capita due to the presence of the Mafia has been slightly overestimated.     

Agency costs and audit quality: evidence from France

The IFRS mandatory adoption in European countries is an excellent context from which to assess the validity of accounting choice theory, which postulates that information asymmetry, contractual efficiency (agency costs) and managerial opportunism reasons could drive the choice. With this aim, we test the impact of these factors to explain the adoption of fair value for investment properties (IAS 40) in the real estate industry, taking into account the ‘revaluation’ option offered by IFRS1 and using historical cost without revaluations as a baseline category for comparison purposes. We select a sample of European real estate companies from Finland, France, Germany, Greece, Italy, Spain and Sweden, all first-time adopters of the IFRS. Using a multinomial logistic model, we show that information asymmetry, contractual efficiency and managerial opportunism could account for the fair value choice. Particularly, the most significant findings are that size as a proxy of political costs reduces the likelihood of using fair value while market-to-book ratio is negatively associated with the fair value choice. On the other hand, leverage, another typical proxy of contracting costs, seems not to influence the choice. This evidence confirms the current validity of traditional accounting choice theory even if it reveals, in such a context, the irrelevance of the usual relations between accounting choice and leverage.     

The costs of job redesign: a preliminary analysis

John Kelly examines and rejects the claim that job redesign satisfies the mutual interests of workers and employers through its provision of improved job satisfaction and performance. He investigates the costs to the parties involved which have been almost invariably neglected.     

Performance of bank mergers and acquisitions: a review of the recent empirical evidence

This review provides a comprehensive analysis of the literature on bank mergers and acquisitions with an emphasis on the last decade. The study identifies and analyzes more than 135 publications focusing on this subject. The publications are grouped along their regional focus and the three main empirical methodologies utilized in the literature. The results are documented in detail and their evolution over time is discussed. The key factors influencing the performance of bank mergers and acquisitions, as identified in the relevant literature, are grouped into three categories and evaluated according to their contribution to the success of a merger. This paper concludes with a brief discussion of the influence of managers on the performance of mergers and acquisitions and evidence on regulatory arbitrage through bank mergers and acquisitions.     

The impact of private equity on European companies and workers: key issues and a review of the evidence

This article provides an overview of the debate about private equity (PE) in Europe, with a focus on the performance of the firms taken over and the pay, conditions and job prospects of the workers they employ. It reviews quantitative indicators for the rise of PE in recent years and explains how the PE business model functions. The main concerns raised by the PE model are identified, and these are then confronted with the evidence from academic and other studies. Finally, some implications of relevance to the debate about the ‘varieties of capitalism’ within the European Union are also drawn.     

Proprietary costs and determinants of voluntary segment disclosure: evidence from Italian listed companies

This paper aims to identify new determinants of the extent of voluntary segment disclosure by using the theoretical framework of the proprietary costs theory, which states that companies limit voluntary disclosure because of proprietary costs, such as preparation and competitive costs. On the basis of the existing literature on this theory and on segment reporting, three hypotheses are theoretically derived, each correlating the level of segment disclosure to a new determinant, specifically the correspondence between the segments and legally identifiable sub-groups of companies, the growth rate and the listing status age. The paper also provides further evidence to test the impact of some ‘traditional’ determinants, introduced in the study as control variables. The hypotheses formulated are empirically verified. The analysis is carried out with reference to Italy, because of its limited legal and professional provisions on the topic. For the empirical test, a sample of sixty-four Italian listed companies is selected and a multiple regression model is used. Results show that, except for the growth rate, the two other new determinants are significantly related to the extent of segment disclosure. These findings confirm that proprietary costs are particularly relevant and limit the incentive for companies to provide segment information to the market.     

Demand for labour inputs and adjustment costs: evidence from Spanish manufacturing firms

This paper studies the structure of the adjustment costs for heterogeneous labour inputs, allowing for asymmetries and interaction effects among them. To do this, I estimate Euler equations for the demands of permanent nonproduction (white collar) and production (blue collar) employees using a sample of Spanish manufacturing firms. These equations are estimated using the subsample of observations for which adjustment is done, controlling for endogenous sample selection. The main results confirm the heterogeneity of adjustment costs for these two labour inputs, and the existence of cross-adjustment effects between them. Weak evidence of asymmetry in permanent nonproduction labour is also found.     

The political economy of organized crime: providing protection when the state does not

Organized crime emerges out of the power vaccuum that is created by the absence of state enforcement, and which can have many sources: geographic, social, and ethnic distance, prohibition, or simply collapse of state institutions. Mafias and gangs are hierarchically organized and can be thought of as providing primitive state functions, with economic costs that are typically much higher than those associated with modern governance. Though organized crime cannot be completely eradicated, its control is necessary, since it can easily corrupt existing institutions of governance. Some thoughts on what can be done to control organized crime are offered.     

The significance of human resource management: a reconsideration of the evidence

Since the publication of the seminal American texts in the early-to-mid-1980s, we have witnessed several years of debate about the academic significance of human resource management (HRM). The debate has been made difficult by the definitional confusion surrounding the term itself. It would be wrong, however, to dismiss HRM on the basis of this confusion. This paper offers a review of the seminal and important works in the HRM canon. It organizes the literature into two broad strands of meaning. The first sees HRM as a practitioner movement or new pattern of management strategy in employment relations, typically emphasizing employee commitment and union substitution. The second sees HRM as a broadly based theoretical development concerned with the relationship between employee relations and strategic management in the firm. While recognizing the links between the two strands, this paper assesses the academic merits of each approach and reaches a series of conclusions on the problems and potential of the subject.     

Determinants and effects of sustainable CEO compensation: a structured literature review of empirical evidence

Management Review Quarterly - Sustainability-oriented CEO compensation is being widely discussed among policy makers, corporate practice, and academia. To date, management literature has yielded a...     

Reconceptualizing the effects of lean on production costs with evidence from the F-22 program

A central tenet in the theory of lean production is that the implementation of lean practices will reduce waste and thereby decrease costs. However, not all lean implementations have produced such results. Apparently, this effect is moderated by several factors, potentially even to the point of reversal. It is important to increase our understanding of how this might occur. In this paper, we explore how novelty, complexity, instability, and buffering affect the relationship between lean implementation and production costs. An interest in these factors drew us to study the case of Lockheed Martin's production system for the F-22, an extremely complex and innovative product. To build theory, we synthesize our empirical data from the case with other existing theory, such as theories of learning and complexity. Through this analysis, we develop a revised framework that reconceptualizes the effect of lean on production costs and use it to develop 11 propositions to direct further research. Included among these are propositions about how the timing, scale, and extent of lean implementation can regulate the benefits of lean. Furthermore, when the objective of lean is construed as the provision of value, we propose that this value is an emergent property of a complex process, different from the mere sum of the values provided by its constituent tasks. Therefore, the elimination of tasks will not guarantee cost reduction, and lean may provide even greater value by incorporating some aspects of agile manufacturing. Overall, we develop a fuller range of the effects of lean practices on production costs and illuminate how operations managers might control key variables to draw greater benefits from lean implementation.     

Re-measuring agency costs: The effectiveness of blockholders

This study examines the effectiveness of blockholders in mitigating agency costs such as managerial extravagance, poor asset management and underinvestment. Our evidence suggests that outside and inside blockholders exert their interventions differently. We find that outside blockholders are more vigilant about mitigating managerial extravagance while inside blockholders, especially managerial blockholders, are more effective in improving the efficiency of firm asset utilization. However, only managerial blockholders significantly overcome underinvestment problems, which may be attributable to their duality roles.     

Accounting choice: The role of monitoring costs

Focusing on monitoring costs, the agency framework is used to extend and test the positive theory of accounting choice. To reduce monitoring cost, a firm is predicted to adopt those accounting methods employed by other firms facing the most similar economic environment. This allows the firm's shareholders (typically acting through the Board of Directors) to use the performance of these other firms to better impute and reward its own manager's performance. This hypothesis is tested and supported by examining, for a sample of industrial firms, the choice of depreciation method.     

Time horizons of environmental versus non‐environmental costs: evidence from US tort lawsuits

One explanation for a positive correlation between environmental and financial performance at the firm level is a bias in firms' investment evaluation processes caused by systematic differences between environmental and other investment opportunities. One of these systematic differences, often hypothesized but still unverified, is that environmental costs occur farther in the future than other costs. We empirically test this hypothesis, and find statistically significant support for it. In our data set the mean time lag for environmental costs was more than ten years, compared with five years for the control set costs. Such a difference could induce managers to accept too much environmental liability if they evaluate investments using discounted cash flow methods with a discount rate based on the firm‐wide cost of capital. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

The duration of homelessness: evidence from a national survey

This paper provides evidence on the determinants of the duration of homelessness. We use newly available data from a large-scale, comprehensive microeconomic survey to estimate a parametric survival model of the length of a spell of homelessness. We find that homeless spells are longer for persons with certain demographic characteristics (such as older men) and behavioral histories (for example, previous incarceration and a history of drug and alcohol abuse). Our results suggest that current eligibility criteria for receiving housing assistance, which give preference to drug-free, single women with young children, are unlikely to reduce homelessness substantially and in a cost-effective manner.     

Bertrand oligopoly in a spatial context: The case of quantity independent transportation costs

The theory of spatial competition [for a review, see Gabszewicz and Thisse (1985)] is usually based on the assumption of transportation costs which are proportionate to distance and quantity. In reality, however, there exist frequently considerable economies of scale, especially with respect to the conveyed quantity of goods. A good case in point is transportation cost incurred by a consumer patronizing a shopping area. Cost economies of scale will in general influence consumers' optimal choice with respect to quantities and best market places. In the extreme, consumers' outlays on transportation can be considered independent of the purchased quantity, but approximately proportionate to distance. In the present paper, the impact of this assumption on spatial competition is analysed. It will be shown, that existence and uniqueness of spatial oligopolistic equilibrium is restored. Furthermore, due to some residual monopolistic power, prices do not converge to the perfectly competitive equilibrium prices when the distance between the firms shrinks to zero. In conclusion the model exhibits a fundamental difference in the market structure, when the spatial aspect is incorporated.     

The time-varying behaviour of real interest rates: a re-evaluation of the recent evidence

A time-varying parameter model with Markov-switching conditional heteroscedasticity is employed to investigate two sources of shifts in real interest rates: (1) shifts in the coefficients relating the ex ante real rate to the nominal rate, the inflation rate and a supply shock variable and (2) unconditional shifts in the variance of the stochastic process. The results underscore the importance of modelling continual change in the ex ante real rate in terms of other economic variables rather than relying on a statistical characterization that permits only a limited number of discrete jumps in the mean of the process. Copyright © 1999 John Wiley & Sons, Ltd.