Using factor analysis to explore principal components for quality management implementation

Quality remains or continues to be one of the top ranking strategic issues in all major organisations. However, today organisations are faced with increasingly sophisticated and informed stakeholder expectations. Standards by which organisations are judged are continuously evolving as are consumer’s expectations, needs and preferences. Thus, in such an environment, the alignment of quality with today’s business challenges, are widely criticized. There is a sense that quality has become outdated somewhere over the last two decades and that it is still predominately understood and practiced using the framework and direction provided historically by quality leaders such as Deming, Juran, Crosby and others. The above has resulted in many organisations struggling with the implementation of quality management. The purpose of this paper is to explore the current status of quality management practices in manufacturing related organisations in South Africa. It extracts principal components, for quality using factor analysis, in order to suggest key factors for quality management in present day, as practiced by the organisations that participated in this study.     

Cost-effectiveness of combination daclatasvir-sofosbuvir for treatment of genotype 3 chronic hepatitis C infection in the United States

Background: A phase III trial evaluated the efficacy and safety of Daklinza (daclatasvir or DCV) in combination with sofosbuvir (SOF) for treatment of genotype (GT) 3 hepatitis C virus (HCV) patients.

Aim: This study evaluated the cost-effectiveness of DCV?+?SOF vs SOF in combination with ribavirin (RBV) over a 20-year time horizon from the perspective of a United States (US) payer.

Methods: A published Markov model was adapted to reflect US demographic characteristics, treatment patterns, costs of drug acquisition, monitoring, disease and adverse event management, and mortality risks. Clinical inputs came from the ALLY-3 and VALENCE trials. The primary outcome was the incremental cost-utility ratio. Life-years, incidence of complications, number of patients achieving sustained virological response (SVR), and the total cost per SVR were secondary outcomes. Costs (2014 USD) and quality-adjusted life years (QALYs) were discounted at 3% per year. Deterministic, probabilistic, and scenario sensitivity analyses were conducted.

Results: DCV?+?SOF was associated with lower costs and better effectiveness than SOF?+?RBV in the base case and in almost all scenarios (i.e. treatment-experienced, non-cirrhotic, time horizons of 5, 10, and 80 years). DCV?+?SOF was less costly, but also slightly less effective than SOF?+?RBV in the cirrhotic and treatment-naïve population scenarios. Results were sensitive to variations in the probability of achieving SVR for both treatment arms. DCV?+?SOF costs less than $50,000 per QALY gained in 79% of all probabilistic iterations compared with SOF?+?RBV.

Conclusion: DCV?+?SOF is a dominant option compared with SOF?+?RBV in the US for the overall GT 3 HCV patient population.     

Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice

We develop a model which reflects the tendency of people to simplify the decision problems they face. The decision maker chooses among alternate strategies only on the basis of the payoff she assesses she would obtain from them, and these assessments do not explicitly take into account her subjective judgements regarding the likelihood of alternate states of the world. At each stage, the decision maker chooses the strategy that she assesses to give the highest payoff. She updates her assessments adaptively. We show that such behavior leads to maxmin choices. We also consider the decision maker who experiences shocks. Journal of Economic Literature Classification Numbers: C7, D8.     

Event Risk Covenants and Shareholder Wealth: Ethical Implications of the "Poison Put" Provision in Bonds

This paper examines the ethical implications of "poison put" provisions included in bond offerings. A number of firms are using event-risk protections in bond offerings in an effort to attract investors back into the bond market. One of the most common event-risk protections is a "poison put" provision, which allows the bondholder to "put" the bond back to the firm at par or at a premium under certain specified conditions, such as a takeover effort or a downgrading of the bond by rating agencies. While such a provision is obviously of value to the bondholders, there is a secondary effect that is not as obvious. Using such a provision helps to insure that boards of directors must put the interests of all of the stakeholders ahead of any personal interests of the board members, thus protecting the stakeholders. The use of event-risk protections helps to deter takeovers, induce bidders to negotiate with management in any takeover efforts, and avoid two-tier takeover offers. As a result, the "poison put" provisions have a positive impact on share values while simultaneously protecting the investments of bondholders. Such an impact makes the use of "poison put" provisions in bonds an ethical use of management power.     

Allegations of Sexual Misconduct: A View from the Observation Deck of Power Distance Belief

Journal of Business Ethics - We seek to understand how third-party observers respond to allegations of sexual transgressions, whether their responses vary and if so why, how they determine...     

Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration

Policy debates suggest a future role for geologic carbon sequestration. As geologic sequestration (GS) evolves from enhanced oil recovery operations to an emissions‐mitigation option, regulations must evolve to manage the risks of carbon dioxide (CO₂) migration. We develop an engineering‐economic model to understand the key deployment pathways in this transition. Major results reveal that dedicated CO₂ storage in aquifers is associated with the greatest net revenues under only a limited number of scenarios. This finding suggests that regulators should anticipate GS operations in reservoirs that were not initially intended as GS operations and, therefore, may have higher leakage rates. Copyright © 2013 John Wiley & Sons, Ltd.     

THE PRIVATE COMPANY DISCOUNT

When appraisers or investment bankers value privately held companies by making comparisons to otherwise similar public companies, they typically apply a discount. Most practitioners attribute this discount mainly to the relative illiquidity of private companies; and, for this reason, they value private companies based on empirical studies designed to measure illiquidity discounts. But this assumption and the valuations based upon it are likely to be unreliable because private companies are valued differently than public companies owing to a variety of other, more "fundamental" factors that have caused the firm to stay private rather than choosing to list on an exchange.
This article presents an alternative framework to estimate the discount for private companies that computes four separate valuation multiples for a set of private transactions and a comparable set of public transactions. After comparing these four sets of multiples for both domestic and foreign firms, the authors reach the following conclusions:

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   Domestic private companies are acquired at an average 20–30% discount relative to similar public companies when using earnings (more precisely, EBIT and EBITDA) multiples as the basis for valuing the transactions. The average discount measured using price- to-book value multiples are somewhat lower, and there are no significant differences between the revenue multiples of acquired private and public companies.

       

A sequential approach to cross-impact analysis

A knowledge of the likelihoods of future scenarios is needed for planning in industry and government. The approach in this article employs the knowledge and the experience of “experts”, in the form of subjective probabilities, to determine the likelihood of the events. The necessary and sufficient conditions that the elicited information from the experts must satisfy in order to consistently compute the likelihoods of the scenarios are derived. A sequential procedure is developed that uses this information in generating the probabilities of the scenarios. Approximation schemes and sensitivity analysis are recommended to implement the approach with less time, effort, and cost.     

The evolution of Indian accounting standards: Its history and current status with regard to International Financial Reporting Standards

This paper addresses the adoption and applicability of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) to India. Specifically, the paper highlights some major areas where the country lacked harmonization with IAS in 1993 and the rapid congruence with IAS in the decade that followed. The attempt to achieve congruence with IAS appears to be more a by-product of the country's rapid economic growth rather than its catalyst. However, continued growth and the attraction of foreign capital to domestic ventures will depend on the transparency of the financial dealings. The Institute of the Chartered Accountants of India, (ICAI), India's standard setting body, is increasingly attempting to provide this transparency by revisions and additions to accounting standards, and by Exposure Drafts which aim to bring India more in line with International Financial Reporting Standards.     

Accounting-based versus market-based cross-sectional models of CDS spreads

Models of financial distress rely primarily on accounting-based information (e.g. [Altman, E., 1968. Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. Journal of Finance 23, 589–609; Ohlson, J., 1980. Financial ratios and the probabilistic prediction of bankruptcy. Journal of Accounting Research 19, 109–131]) or market-based information (e.g. [Merton, R.C., 1974. On the pricing of corporate debt: The risk structure of interest rates. Journal of Finance 29, 449–470]). In this paper, we provide evidence on the relative performance of these two classes of models. Using a sample of 2860 quarterly CDS spreads we find that a model of distress using accounting metrics performs comparably to market-based structural models of default. Moreover, a model using both sources of information performs better than either of the two models. Overall, our results suggest that both sources of information (accounting- and market-based) are complementary in pricing distress.