Autonomy and improved performance: lessons from an NHS policy reform

Autonomy is currently seen by policy-makers in many countries as a possible mechanism for enhancing public sector performance. The authors examine a service reform (the National Health Service in England) in which more autonomy was given to better performing hospitals. Drawing on data from interviews with senior managers, the research suggests that despite being enmeshed in a politicized culture of regulations and guidance, autonomy is increasingly perceived positively and appears to depend on the extent to which organizations have the incentives and the capacity to respond to increased autonomy. The article presents findings that will be of value to policy-makers in many countries.     

THE WEALTH EFFECTS OF TRACKING STOCK RESTRUCTURINGS

We provide a comprehensive examination of the post‐issue wealth effects of 29 completed tracking stock restructurings. We document that for the parent stock and for the combined firm, tracking stock restructurings lead to insignificant long‐term excess returns. However, we find that shareholders of tracking stocks realize significant post‐issue wealth losses. Unlike spin‐offs and carve‐outs, announcements of tracking stock restructurings are preceded by negative one‐year excess returns, and unlike the positive post‐issue long‐term excess returns to spin‐off stocks and the insignificant long‐term excess returns to carve‐out stocks, tracking stocks experience negative long‐term excess returns.     

Is sovereign risk related to the banking sector?

We examine whether the banking sector within a nation is related to sovereign risk. We hypothesize that more competitive and sophisticated financial systems are less prone to panics or bank runs, and consequently will be associated with superior sovereign credit ratings. Using Ordered Probit with Aggregate Time Effects methodology, our results show that banking sector characteristics such as concentration in the banking system, liquidity of bank assets, and size of financial system are significantly related to sovereign credit ratings. Since the use of these sovereign ratings is ubiquitous in international finance in varied applications such as determination of the cost of international borrowing by governments, international cost of capital for FDI, and others, the relationships identified in this paper have important public policy implications.     

Myopia or strategic behavior? Indian regimes and the East India Company in late eighteenth century India

The East India Company's conquest of India was facilitated by the behavior of its Indian rivals who not only did not ally against it, but often supported it militarily. Historians have typically attributed this to myopia, the failure to understand the long-term threat represented by the Company. We examine the negotiations leading up to a key conflict, the Third Mysore War, and find that the Company's allies were not myopic. The British parliament had, in 1784, passed Pitt's India Act, which limited the scope for unprovoked military aggression by the Company in India. This had changed the behavior of the Company, making its promises more credible. This enhanced credibility made it possible for the Company to secure as allies Indian regimes that were acting strategically in their self-interest. This is a new explanation for an old puzzle.     

Advertising,the matchmaker

We empirically study the informational role of advertising in matching consumers with products when consumers are uncertain about both observable and unobserved program attributes. Our focus is on the network television industry, in which the products are television shows. We estimate a model that allows us to distinguish between the direct effect of advertising on utility and its effect through the information set. A notable behavioral implication is that exposure to informational advertising can decrease the consumer’s tendency to purchase the promoted product. The structural estimates imply that an exposure to a single advertisement decreases the consumer’s probability of not choosing her best alternative by approximately 10%. Our results are relevant for industries characterized by product proliferation and horizontal differentiation.     

Comparing predicted prices in auctions for online advertising

Online publishers sell opportunities to show ads. Some advertisers pay only if their ad elicits a user response. Publishers estimate response rates for ads in order to estimate expected revenues from showing the ads. Then publishers select ads that maximize estimated expected revenue.By taking a maximum among estimates, publishers inadvertently select ads based on a combination of actual expected revenue and inaccurate estimation of expected revenue. Publishers can increase actual expected revenue by selecting ads to maximize a combination of estimated expected revenue and estimation accuracy.     

An approach to prioritize customer-based,cost-effective service enhancements

Service firms routinely enhance their offerings to satisfy and retain current customers and to attract new customers. We show theoretically that service improvements can be prioritized by simultaneously taking into account the likely incremental revenue (through increased customer value) and the incremental cost of making the improvement. The customer values obtained from a sample of respondents, and cost estimates obtained from managers of the service providing organization are combined to prioritize improvements using a ‘bang for the buck’ (i.e. value/cost) rule. Such a prioritization would be helpful to come up with a ‘short list’ of service improvements. The items on the short list can be evaluated in detail for their ‘Return on Quality’. The approach for prioritization is illustrated in the context of improving passenger train service between a pair of cities in India. An adaptive self-explicated approach is used for obtaining customer values and cost estimates. The customer values so elicited display substantial cross-validity.     

BANK HOLDING COMPANY ACQUISITIONS,STOCKHOLDER RETURNS,AND REGULATORY UNCERTAINTY

This paper examines the returns accruing to the bank holding company (BHC) stockholders when an acquisition is initiated by the BHC. There is a significant, positive abnormal return to these shareholders when the acquisition is announced. The magnitude of this return does not depend on the relative size of the acquired firm. Further, the regulatory environment for these BHC acquisitions introduces uncertainty about the eventual outcome of the review process. Upon approval from the Federal Reserve Board (FRB), the BHC stockholders earn an additional, significantly positive abnormal return.