Professional mismanagement: The skill wastage in employment

Absenteeism and overmanning occur in management too, as do collusive games that give a false impression of the manager's worth and the professional's relevance. New forms of employment contract are one way to alleviate the problem.     

An analysis of pricing and basis risk for industry loss warranties

In recent years, industry loss warranties (ILWs) have become increasingly popular in the reinsurance market. The defining feature of ILW contracts is their dependence on an industry loss index. The use of an index reduces moral hazard and generally results in lower prices compared to traditional, purely indemnity-based reinsurance contracts. However, use of the index also introduces basis risk since the industry loss and the reinsured company’s loss are usually not fully correlated. The aim of this paper is to simultaneously examine basis risk and pricing of an indemnity-based industry loss warranty contract, which is done by comparing actuarial and financial pricing approaches for different measures of basis risk. Our numerical results show that modification of the contract parameters to reduce basis risk can either raise or lower prices, depending on the specific parameter choice. For instance, basis risk can be reduced by decreasing the industry loss trigger, which implies higher prices, or by increasing the reinsured company attachment, thus inducing lower prices.     

A Lagrangian heuristic for the real-time vehicle rescheduling problem

When a public transit vehicle breaks down on a scheduled trip, one or more vehicles need to be rescheduled to serve that trip and other service trips originally scheduled for the disabled vehicle. In this paper, the vehicle rescheduling problem (VRSP) is investiaged to consider operating costs, schedule disruption costs, and trip cancellation costs. The VRSP is proven to be NP-hard, and a Lagrangian relaxation based insertion heuristic is developed. Extensive computational experiments on randomly generated problems are reported. The results show that the Lagrangian heuristic performs very well for solving the VRSP.     

DESIGNING AND MANAGING MULTIPLE PIPELINES

There is a growing recognition that supply chains should be designed from “the customer backwards” rather than from “the company outwards.” If such a view is accepted then the implication is that since the organization will likely be serving multiple markets or segments, there will be the need to design and manage multiple pipelines to serve those different customers. To assist decision makers in their choice of appropriate supply chain design, a framework is proposed based upon multiple criteria. A case study is presented which highlights the benefits of selecting, engineering, and operating multiple pipelines tailored to the needs of the marketplace.     

SAVINGS BEHAVIOR IN 17 OECD COUNTRIES

This article compares savings behavior in a sample of 17 OECD countries over 24 years. On the basis of an analysis of variance and of a life-cycle-hypothesis-based equation, we test the homogeneity of households' savings behavior. It appears that one cannot really speak of a homogeneous saving behavior across countries. This is a relevant finding in times of increasing economic and financial integration.     

S&P 500 Index Additions and Earnings Expectations

Stock price increases associated with addition to the S&P 500 Index have been interpreted as evidence that demand curves for stocks slope downward. A key premise underlying this interpretation is that Index inclusion provides no new information about companies' future prospects. We examine this premise by analyzing analysts' earnings per share (eps) forecasts around Index inclusion and by comparing postinclusion realized earnings to preinclusion forecasts. Relative to benchmark companies, companies newly added to the Index experience significant increases in eps forecasts and significant improvements in realized earnings. These results indicate that S&P Index inclusion is not an information‐free event.     

Hedging with the Nikkei index futures: The convential model versus the error correction model

This study estimates and compares the hedge ratios of the conventional and the error correction models using Japan's Nikkei Stock Average (NSA) index and the NSA index futures with different time intervals. Comparisons of out-of-sample hedging performance reveal that the error correction model outperforms the conventional model, suggesting that the hedge ratios obtained by using the error correction model do a better job in reducing the risk of the cash position than those from the conventional model. In addition, this paper evaluates the effects of temporal aggregation on hedge ratios. It is found that temporal aggregation has important effects on the hedge ratio estimates.     

Implications Of the AWA Decision For External Auditors, Internal Auditors And Management

The decision in AWA Ltd v Daniels has important implications for auditors, directors and other professionals providing accounting services to clients. Previously, where the external auditor had been negligent, Australian courts awarded full damages against the auditor in favour of the plaintiff In AWA, a defence of contributory negligence succeeded and damages were apportioned between the company and the external auditor. Also, the auditor succeeded in a claim for contribution against the chief executive officer. This paper analyses the implications of the AWA decision for internal and external auditors and management. It examines issues related to contributory negligence and contribution. These issues are important in the light of recent discussion about reform of the law concerning "proportional" liability.     

Environmental commitment and manufacturing excellence: a comparative study within Canadian industry

The development of an environmental policy represents the cornerstone of an environmental management system (EMS), an essential tool that helps companies both systematically manage their environmental obligations and risks, and promote these objectives throughout the entire organization. The implementation of such policies must rest not solely upon the development of specific pollution‐reduction programmes but also upon more encompassing issues dealing with the examination of existing management systems and work procedures. This paper presents the results of a study conducted in 250 manufacturing firms. It examines factors such as manufacturing policies and competitive positioning in their role as driving forces behind environmental commitment. The study's results demonstrate that environmental commitment is often linked to sound management practices. Good relations with both employees and suppliers, participatory management and total quality management programmes appear to be intimately correlated with the existence of an environmental policy. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment