Evidence on competitive advantage and superior stock market performance

This article analyzes the value‐relevance of industry‐based and resource‐based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986–2005, the industry‐based and the resource‐based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over 5 years. The resource‐based advantage is almost 4 times more important than the industry‐based advantage. Differences in both the return and the risk capability of firms' net assets relative to their industry peers are significant parts of the resource‐based advantage, estimated at 60 and 40%, respectively. Copyright © 2009 John Wiley & Sons, Ltd.     

Stakeholder conflicts and dividend policy

This paper compares the dividend policy of owner-controlled firms with that of firms where the owners are a minority relative to non-owner employees, customers, and community citizens. We find that regardless of whether owners or non-owners control the firm, the strong stakeholder uses the dividend payout decision to mitigate rather than to intensify the conflict of interest with the weak stakeholder. Hence, the higher the potential agency cost as reflected in the firm’s stakeholder structure, the more the actual agency cost is reduced by the strong stakeholder’s dividend payout decision. These findings are consistent with a dividend policy in which opportunistic power abuse in stakeholder conflicts is discouraged by costly consequences for the abuser at a later stage. Indirect evidence supports this interpretation.     

Cost-minimization comparison of darunavir plus ritonavir and lopinavir/ritonavir in HIV-1 infected treatment-naïve women of childbearing age

Background:

Guidelines from the Department of Health and Human Services in the US recommend ritonavir-boosted lopinavir (LPV/r) as a preferred protease inhibitor (PI) for HIV-positive antiretroviral-na?ve pregnant women. These guidelines also cite ritonavir-boosted darunavir (DRV?+?RTV) as an alternative PI in this clinical scenario. The purpose of this analysis was to compare economic outcomes for regimens based on these two treatments.

Study design:

An existing discrete event simulation (DES) model was adapted to conduct a cost-minimization analysis comparing the two regimens in HIV-infected women of childbearing age (WOCBA), from the perspective of a healthcare payer in the US.

Methods:

The DES model was used to represent disease states, health events, healthcare encounters, pregnancy, and treatment choices in HIV-infected WOCBA starting treatment with regimens based on either LPV/r or DRV?+?RTV. It also incorporated parameters for individual patient characteristics, and for antiretroviral (ARV) treatment effectiveness, treatment sequencing, clinical progression, and resource use. Potential events included scheduled physician visits; viral suppression; viral rebound; AIDS-related complications; CHD events; treatment discontinuation and switching; ARV treatment side-effects (SE); and death. The primary outcomes were discounted 5-year and 10-year healthcare costs. Alternative scenarios considered different rates of switching from DRV?+?RTV to LPV/r upon conception.

Results:

Compared with DRV?+?RTV, LPV/r was associated with similar clinical outcomes while offering savings at the 5- and 10-year horizons (of $24,904 and $43,502 per patient, respectively), and in extensive sensitivity analyses. The main driver of the savings was the difference in cost between PIs.

Conclusions:

Starting HIV-infected ARV-treatment-na?ve WOCBA on an LPV/r-based regimen is cost-saving and provides similar patient outcomes compared to a DRV?+?RTV-based regimen.     

Cost-effectiveness of add-on treatments to metformin in a Swedish setting: liraglutide vs sulphonylurea or sitagplitin

Objective:

To evaluate long-run cost-effectiveness in a Swedish setting for liraglutide compared with sulphonylureas (glimepiride) or sitagliptin, all as add-on to metformin for patients with type 2 diabetes insufficiently controlled with metformin in monotherapy.

Methods:

The IHE Cohort Model of Type 2 Diabetes was used to evaluate clinical and economic outcomes from a societal perspective. Model input data were obtained from two clinical trials, the Swedish National Diabetes Register and the literature. Cost data reflected year 2013 price level. The robustness of results was checked with one-way-sensitivity analysis and probability sensitivity analysis.

Results:

The cost per QALY gained for liraglutide (1.2?mg) compared to SU (glimepiride 4?mg), both as add-on to metformin, ranged from SEK 226,000 to SEK 255,000 in analyzed patient cohorts. The cost per QALY for liraglutide (1.2?mg) vs sitagliptin (100?mg) as second-line treatment was lower, ranging from SEK 149,000 to SEK 161,000. Costs of preventive treatment were driving costs, but there was also a cost offset from reduced costs of complications of ～20%. Notable cost differences were found for nephropathy, stroke, and heart failure. The predicted life expectancy with liraglutide increased the cost of net consumption for liraglutide.

Limitations:

The analysis was an ex-ante analysis using model input data from clinical trials which may not reflect effectiveness in real-world clinical practice in broader patient populations. This limitation was explored in the sensitivity analysis. The lack of specific data on loss of production due to diabetes complications implied that these costs may be under-estimated.

Conclusions:

Treatment strategies with liraglutide 1.2?mg improved the expected quality-of-life and increased costs when compared to SU and to sitagliptin for second-line add-on treatments. The cost per QALY for liraglutide was in the range considered medium by Swedish authorities.     

Market switching in shipping — A real option model applied to the valuation of combination carriers

This paper derives a real options model of flexibility and applies it to shipping, valuing the option to switch between the dry bulk market and wet bulk market for a combination carrier, a ship type that is capable of operating in both markets but that has fallen out of favor due to high price tags. The model is a mean-reverting (Ornstein–Uhlenbeck) version of a standard entry–exit model with stochastic prices. A closed form solution for the value of flexibility is derived, expressed in terms of Kummer functions. The estimated value of flexibility is related to historical price differentials between combination carriers and oil tankers of comparable size. Based on numerical experiments it is concluded that new combination carriers may enter the market in the near future.     

HRM and IR in multinational corporations in Denmark: uneasy bedfellows?

As multinational corporations operate in multiple countries, headquarters must take into account differences in local settings when seeking the means to coordinate and control subsidiaries. The local system of industrial relations sets the framework for what kind of human resource management a multinational corporation can implement. Yet another question is whether the still stronger multinationals can change the existing systems of industrial relations, directly or indirectly.

The paper analyzes four Danish enterprises over a 10-year period. This longitudinal study shows that none of the multinationals directly try to interfere in local industrial relations. However, by exercising their management prerogative in a way that differs from the Northern European tradition of industrial relations, they do influence the cooperation between employers and employees. In particular, the results show, that a shift from a stakeholder to a shareholder management style and an increased degree of HQ control have an effect on the whole cooperative atmosphere in each of the companies. In the long run, they may affect the collective bargaining system as such.     

Measuring Housing Subsidies: Distortionary and Distributional Effects in the Netherlands

This paper measures the distortionary and distributional effects of housing subsidies in the Netherlands. Its broad scope allows us to discuss the results in the light of the main justifications for subsidising housing, i.e. the merit–good argument, external effects and the distribution motive. Our measurements reveal some patterns of subsidisation that seem difficult to justify on these grounds. This applies especially to the differences between subsidisation of rental and owneroccupied housing and between mortgage– and equity–financed ownership. Moreover, the inelastic supply of housing in the Netherlands entails that subsidisation has only a limited effect on promoting housing quality.     

Company Delistings from the UN Global Compact: Limited Business Demand or Domestic Governance Failure?

While a substantial amount of the literature describes corporate benefits of corporate social responsibility (CSR) initiatives, the literature is silent concerning why some companies announce CSR initiatives, yet fail to implement them. The article examines company delistings from the UN Global Compact. Delistings are surprising because the CSR agenda is seen as having won the battle of ideas. The analysis proceeds in two parts. I first analyze firm-level characteristics focusing on geography while controlling for sector and size; I find that geography is a significant factor while small firms are more likely to be delisted than large firms and some sector characteristics determine delistings. Next, I proceed to uncover country-level characteristics including the degree of international economic interdependence as well as the quality of governance institutions. Multivariate regression analysis shows that companies are less likely to be delisted from countries where domestic governance institutions are well-functioning. To a lesser extent, I find that firms from countries with international economies are more willing to comply with the UN Global Compact requirements. Countries with a high share of outward FDI/capita have a lower share of delisted firms as do countries that are internationally competitive.     

A Generalisation of the Mean-Variance Analysis

In this paper we consider a decision maker whose utility function has a kink at the reference point with different functions below and above this reference point. We also suppose that the decision maker generally distorts the objective probabilities. First we show that the expected utility function of this decision maker can be approximated by a function of mean and partial moments of distribution. This 'mean-partial moments' utility generalises not only mean-variance utility of Tobin and Markowitz, but also mean-semivariance utility of Markowitz. Then, in the spirit of Arrow and Pratt, we derive an expression for a risk premium when risk is small. Our analysis shows that a decision maker in this framework exhibits three types of aversions: aversion to loss, aversion to uncertainty in gains, and aversion to uncertainty in losses. Finally we present a solution to the optimal capital allocation problem and derive an expression for a portfolio performance measure which generalises the Sharpe and Sortino ratios. We demonstrate that in this framework the decision maker's skewness preferences have first-order impact on risk measurement even when the risk is small.