The 1986 U.K. Insolvency and Company Directors' Disqualification Acts: An evaluation of their impacts upon small firm financing decisions

This paper examines the potential impact of the 1986 U.K. Insolvency and Company Directors' Disqualification Acts on small firm financing decisions. With the aid of a simplified Black and Scholes (1973) option model of financing decisions, the paper illustrates how the 1986 legislation reduces the incentives for owner-managers to gamble with creditor claims, particularly in situations of financial distress, by making them personally liable for unmet claims and/or by disqualifying them from holding office for a fixed period. For instance, example 3 in the paper shows the conflict that could result from the owner-manager reducing his/her opening equity position and it further argues how the legislation should act to alleviate the situation. It remains, however, an empirical question as to whether this reduction in creditors' exposure to the risk of uncompensated wealth transfers will ultimately result in a significantly greater number of company liquidations and disqualifications, particularly during a prolonged economic downturn, or an improved/less costly supply of finance to small firms.     

Action Teams That Work

A growing awareness of workplace hazards and identification of airborne contaminants, coupled with a changing safety and health regulatory environment, created an unexpected demand for new and innovative respirators in the early 1980s. 3M's Occupational Health and Environmental Safety Division broke new ground by taking the team concept further than ever before in the company. The division's Action Teams successfully designed, built and introduced products in less than half the time it would have taken previously. Robert Hershock, Charles Cowman and Douglas Peters describe how 3M learned important lessons about team selection, training, performance and motivation, the importance of project sponsors, and the role of middle management.     

Racial disparity in the atlanta housing market

Atlanta has the reputation of being a city of opportunity for blacks. However, in Atlanta, as well as in other cities across the nation, the nexus of racism and economic discrimination has resulted in disparities between the housing status of blacks and whites. This article examines racial disparities in the Atlanta housing market. It begins by tracing recent trends in the Atlanta-area economy and by providing background information on the local housing market. It then discusses the roles of the federal Home Mortgage Disclosure Act of 1975 and Community Reinvestment Act of 1977 in the efforts of local groups to reduce racial disparities in the housing market. The final section discusses recent local developments that might lead to improvements in the housing status of black Atlantans.     

Further Ambiguity When Performance Is Measured by the Security Market Line

This paper employs the optimality conditions for expected utility and mean-variance portfolio problems to examine the ambiguities associated with the security market line criterion both at a point in time and through time. At a point in time, we show that the security market line criterion can be irrelevant, even in meanvariance economies. In a multiperiod setting, we show that the analysis of performance based on portfolio choice is inconsistent with the analysis based on return generating models. Empirical work suggests that the inconsistency can lead to dramatically different estimates of a security's required return.     

The effects of mergers on price and output: Two case studies from the airline industry

The literature on industrial organization contains very little direct evidence on the effects of actual mergers. This study estimates the effects of two recent airline mergers approved by the Department of Transportation over the objection of the Department of Justice. The merger of TWA and Ozark appears to have caused a slight increase in fares and a far greater reduction in service on city pairs out of St Louis. The merger of Northwest and Republic appears to have caused a significant increase in fares and a significant reduction in overall service on city pairs out of Minneapolis-St Paul.     

The local economic impact of construction projects in a small and relatively self-contained economy: The case of Lancaster University

Whilst the local multiplier impacts of the annual operation of universities has been the subject of intensive research, the economic impacts of capital construction projects have been almost completely ignored. This paper presents the results of detailed analysis of capital projects at Lancaster University in 1993-The reasons for the radically different annual operation and construction multipliers estimated in the Lancaster study are examined. Despite the smaller size of construction multipliers it is argued that it is a serious mistake to estimate local construction multipliers by making simplifying assumptions on the size of the key parameters in the multiplier equations.     

Nash equilibrium reconsidered and an option for maximin

In this paper we will discuss some peculiarities of the Nash equilibrium which are at odds with its standard applications: (a) the underlying dynamic interpretation, (b) the incentive independency if equilibria are mixed, and (c) the unprofitability if equilibrium and maximin are mixed and the game is 2-by-2. Maximin is proposed as an alternative solution concept in “relevant situations”.     

The Structure of Protection in Indonesia in 1989 1

Around the mid-1980s, Indonesia's protectionist regime supported an industrial structure in which industries were mainly oriented towards producing for the domestic market. Since then, trade policies have shifted to a more outward-looking strategy, stimulating the growth and diversification of non-oil manufactured exports. This paper attempts to quantify the nominal and effective rates of protection resulting from trade policies at the end of the 1980s. After an introduction in which the 1989 trade policies are discussed, estimates of nominal and effective rates of protection are presented. It is shown that though the level of protection has declined since 1987, it still varies widely across economic sectors. Furthermore, despite the more open trade strategy, the paper's findings show that the trade regime remains biased against exports. Finally, by examining some trade policy issues, the paper presents further ways of rationalising the structure of protection in Indonesia's industrial sector.     

Optimal Collective Investment in Generic Advertising, Export Market Promotion and Cost-of-Production-Reducing Research

Optimal investment rules are developed for a producer agency investing in domestic-market generic advertising, export market promotion, and cost-of-production-reducing research. These rules are derived assuming either maximization of producers' surplus or social surplus. The form of the optimality rules differs according to which objective is pursued. Fixed producer agency budgets are also allowed by incorporating a constraint limiting total expenditure on the three activities. Addition of such a constraint substantially alters the structure of the optimal investment rules. Differences in these rules highlight the importance of accounting for the financing mechanism when modeling optimal checkoff fund investment decisions. Optimality rules are simulated using data for the Canadian beef sector. Results suggest historic underinvestment in domestic-market generic advertising but overinvestment in export market promotion. Sensitivity of simulation results underscores the difficulty in assessing optimality of historic producer investment in cost-of-production-reducing research.