Making Financial Goals and Reporting Policies Serve

The main. nancial goal of Progressive Insurance, the third largest underwriter of auto insurance in the U.S., has remained the same since the late 1960s. Expressed in three words, "96 and grow," the goal tells the company's managers to pursue all growth opportunities while maintaining a "combined ratio" no higher than 96, or what amounts to a minimum 4% spread between revenues (premiums) and costs (including expected losses). Thanks in part to the clarity of mission provided by this goal, the company has produced an average 15% rate of growth in revenues and earnings, along with a remarkably stable 15% return for its shareholders, since going public in 1971.
Progressive's simplicity and clarity of mission is also partly responsible for another of the company's distinctive policies: product pricing that, while disciplined, is aggressive and highly decentralized. Having invested some $500 million per year developing statistical models for pricing individual customer risks and acquisition costs, the company was among the. rst in its industry to underwrite "non-standard" risks. And aided by sophisticated pricing models, each of Progressive's 100 or so local product managers are charged with adapting those models to come up with premiums for their own regions.
To go along with its strategic and organizational innovations, Progressive also has an innovative disclosure policy. Apart from SEC reports, the company's communications seldom mention earnings or earnings per share, and the company has never provided earnings guidance. With the passage of Reg. FD in late 2000, the company brie. y considered offering guidance. But in the spring of 2001, the board decided instead to provide monthly releases of its realized combined ratio. Since adoption of this new disclosure policy, Progressive has seen a 50% drop in the volatility of its stock price.     

Opening the Black Box: Corporate Codes of Ethics in Their Organizational Context

A review of the literature on Corporate Codes of Ethics suggests that whilst there exists an informative body of literature concerning the prevalence of such codes, their design, implementation and promulgation, it is also evident that there is a relative lack of consideration of their impact upon members' everyday organizational behaviour. By drawing upon organizational sociology and psychology this paper constructs a contextualist and interpretive model which seeks to enable an analysis and evaluation of their effects upon individual, group and organizational behaviour.     

In Search of Theory Development in Grounded Investigations: Doctors' Experiences of Managing as an Example of Fitted and Prospective Theorizing

This article draws on a study of doctors’ experiences of clinical managing to highlight research conventions that limit the development and use of middle range theories in grounded studies. Using sensemaking and the psychological contract as example frameworks, we illustrate how customary deductive evaluations of middle range theories turn grounded researchers away from theory building. As a correction to these conventions, we offer an inductive approach to building existing theory in grounded investigations that does not depend solely on working with frameworks under different empirical conditions. We suggest that forward theorizing is most likely to progress from a synthesis of fitted explanation and prospective thinking that presses at the limits of the data's usefulness. To illustrate this approach, trialled thinking about novel theoretical juxtapositions and alternative sources was used in conjunction with our clinical director data. The value of this approach was supported in two ways. First, a number of fitted and prospective conjectures are offered about how social identity articulates with psychological contracts and sensemaking in role change situations. Second, new light is shed on the process by which particular social conditions differentially modify employees’ social categorizations, and how these inform employee responses to the evolving experience of role change. The article concludes with some tentative proposals for promoting more discussion of theory building in grounded investigations.     

Temporary controls on capital inflows

During the past decade a number of countries imposed capital controls that had two distinguishing features: they were asymmetric, in that they were designed principally to discourage capital inflows, and they were temporary. This paper studies formally the consequences of these policies, calibrates their potential effectiveness, and assesses their welfare implications in an environment in which the level of capital inflows can be sub-optimal. In addition, motivated by the fact that these types of controls have often been left in place after the dissipation of the shock that lead to the controls being implemented, the paper evaluates the welfare cost of procrastination in removing these types of controls.     

Inferential Causal Models: Integrating Quality & Quantity

In-depth data analysis plus statistical modeling can produce inferentialcausal models. Their creation thus combines aspects of analysis by close inspection,that is, reason analysis and cross-tabular analysis, with statistical analysis procedures,especially those that are special cases of the generalized linear model (McCullaghand Nelder, 1989; Agresti, 1996; Lindsey, 1997). This paper explores some of the roots of this combined method and suggests some new directions. An exercise clarifies some limitations of classic reason analysis by showing how the cross tabulation of variables with controls for test factors may produce better inferences. Then, given the cross tabulation of several variables, by explicating Coleman effect parameters, logistic regressions, and Poisson log-linear models, it shows how generalized linear models provide appropriate measures of effects and tests of statistical significance. Finally, to address a weakness of reason analysis, a case-control design is proposed and an example is developed.     

The proletarianisation of academic labour

This article looks at industrial relations changes, conflict and control in higher education, particularly among university academics. It suggests a tendency towards proletarianisation, and a focus on the academic labour process is useful in explaining growing conflict. An apparent HRM agenda and (reluctantly) increasing managerialism are forms, not causes, of change which is driven by funding pressures similar to those affecting other HE systems.     

Risk and the miller equilibrium: Capital structure choice with risk-averse investors

Merton Miller's (1977) tax model of equilibrium capital structure choice results in capital structure irrelevance and the existence of tax clienteles, assuming the restrictive case of risk-neutrality. Relaxation of the assumption of risk-neutrality in Miller's tax framework, allowing utility-maximizing risk-averse investors, indicates that capital structure irrelevance continues to hold under reasonable assumptions about utility. Evaluation of resulting tax clienteles shows that marginal tax rates do not restrict investors from investing in equities but do affect the tax status of purchased bonds.