Integration managers: special leaders for special times

Although the integration of an acquired company with the parent organization is a delicate and complicated process, traditionally no one has ever been responsible for that process--for charting how the two companies will combine their operations, for seeing to it that the integration project meets its deadlines and performance targets, and for educating the new people about the parent company and vice versa. Some enlightened companies have recognized this gap and have appointed a guide--the integration manager--to shepherd everyone through the rocky territory that two organizations must cross before they can function effectively together. The authors have interviewed a number of these leaders in depth, as well as some of the people with whom they've worked. They've determined that integration managers help the merger process in four principal ways: they speed it up, create a structure for it, forge social connections between the two organizations, and help engineer short-term successes. In this article, the authors detail five acquisitions--at TI, General Cable, Meritor Automotive, Lucent, and Johnson & Johnson--and discuss the role that integration managers played in each. They describe exactly what sort of person should do this job. The integration manager must be able to jump into complex situations quickly, relate to many levels of authority smoothly, and bridge gaps in culture and perception. The ever-changing organizations of the Internet age will need leaders with similar skills. In fact, the authors contend, the integration manager should be considered a prototype for the leader of the future.     

Non-Segmented Equilibria Under Differential Taxation: Evidence from the Canadian Government Bond Market

This paper investigates tax effects in the Canadian governmentbond market during the period 1964—1986. Unlike previousstudies, we apply both statistical and nonstatistical teststoanalyze clientele effects and market equilibria. The resultsdivide the sample into two distinct periods of time, with theend of 1976 marking the division. We find that tax effects arealmost nonexistent in the Canadian government bond market beforethe end of 1976, but are predominant in the post-1976 period.Non-segmented market equilibria cannot be rejected before 1977,but are strongly rejected after 1976. In fact, segmented equilibriawith clientele effects in both quantities and prices characterizethe entire five year period from 1982 to 1986. These findingsare consistent with tax reforms, government deficit financingand interest rate fluctuations in Canada during our sample period.     

Understanding the Large Negative Impact of Oil Shocks

This paper offers a plausible explanation for the close link between oil prices and aggregate macroeconomic performance in the 1970s. Although this link has been well documented in the empirical literature, standard economic models are not able to replicate this link when actual oil prices are used to simulate the models. In particular, standard models cannot explain the depth of the recession in 1974–75 and the strong revival in 1976–78 based on the oil price movements in that period. This paper argues that a missing multiplier-accelerator mechanism from standard models may hold the key.     

The valuation consequences of voluntary accounting changes

Firm management typically claims that voluntary accounting method changes (VACs) are made to enhance the informativeness of earnings by better matching accounting practices with economic reality. In contrast, skeptics argue that managers adopt new accounting procedures to opportunistically manage earnings and influence their firm’s stock price. In this paper, we investigate these alternative motives for VACs. Specifically, we investigate whether VACs cause equity prices to deviate from their fundamental values in the short-term by studying the long-run stock-price performance for a sample of firms that voluntarily change accounting methods. In addition, we investigate changes in earnings informativeness by examining the behavior of earning response coefficients and the relationship between earnings and future cash flows in years surrounding the VAC event. In contrast to prior research, we find little evidence that a strategy based solely on the earnings effect of a VAC can generate abnormal returns. While we find weak evidence of post-VAC abnormal returns for extreme VACs, this result appears to be driven by the accruals anomaly documented in Sloan [Sloan, R. G. (1996). The Accounting Review, 71, 289–315]. Our evidence further suggests that earnings informativeness is not significantly altered by voluntary changes in accounting methods. Taken together, our evidence suggests the market recognizes the financial statement effects of alternative acceptable accounting methods and efficiently processes the valuation implications of VACs.

Hedging emerging market bonds and the rise of the credit default swap

On October 5, 2001, when credit spreads were widening, the Chicago Mercantile Exchange CME de-listed the full menu of emerging market Brady bond futures contracts. This is intriguing because at a time when interest in hedging and speculating in emerging market sovereign credit risk should be at its peak, the CME de-listed precisely the sort of contract designed to hedge and speculate in sovereign credit risk. This paper finds statistical evidence suggesting that the developing over the counter CDS contract acted as a substitute product for the Brady bond futures contract thereby undermining the Brady bond futures contract and contributing to its demise.     

Screening life insurance applicants with hemoglobin A1c: a pilot study of cost-benefit

Hemogloblin A1c (HgbA1c) values are superior to those of random serum glucose, serum fructosamine, and urine glucose as a means of detecting carbohydrate intolerance. Further, HgbA1c values have been shown to correlate with mortality in a continuous fashion beginning at levels between 5.0% and 6.0%. Unfortunately, the expense of HgbA1c testing is considerably higher than that of routine serum chemistry testing. Diabetes is an increasingly common disorder clearly associated with mortality. Also, the current demographic trends towards increasing age and increasing prevalence of obesity underscore the value to underwriters of identifying carbohydrate intolerance.     

Do Investor Sophistication and Trading Experience Eliminate Behavioral Biases in Financial Markets?

This paper provides an in depth analysis of an investor’s reluctance to realize losses and his propensity to realize gains – a behavior known as the disposition effect. Together, sophistication (static differences across investors) and trading experience (evolving behavior of a single investor) eliminate the reluctance to realize losses. However, an asymmetry exists as sophistication and trading experience reduce the propensity to realize gains by 37% (but fail to eliminate this part of the behavior.) Our research design allows us to follow an individual’s behavior from the start of his investing life/career. This ability makes it possible to track the evolution of the disposition effect as it is reduced and/or disappears. Our results are robust to alternative explanations including feedback trading, calendar effects, and frequency of observation.     

Aged-care support in Japan: perspectives and challenges

This article explores economic aspects of the market for long-term care (LTC) in Japan. As the world's most rapidly aging nation, it is of interest to understand that country's current LTC system and projections of LTC utilization patterns and costs, as well as their potential drivers. Since Japan appears likely to experience important shortfalls in LTC in the future, the authors also discuss alternate forms of provision.     

Doing qualitative field research in management accounting: Positioning data to contribute to theory

In this paper we argue that theory, method, methodology, and knowledge gains in qualitative field studies are intertwined through the ongoing hypothesis development in the field. We develop our argument through a discussion of specific qualitative field studies in management accounting. We emphasise in particular the distinctive role of theory in qualitative research as relating to expression of a subjective reality more than clarification of an objective one. In considering this subjectivity we discuss the ways in which the doing of qualitative research brings to bear discipline on the researcher allowing us to assess the trustworthiness of their accounts. The intention is to develop a more appropriate basis for judging the plausibility of qualitative field studies than notions borrowed from positivistic methodology.     

The economic dimensions of malnutrition in young children

1 billion people - 1/3 of them children under the age of 10 - live on diets that are deficient in essential calories. Focus in this discussion is on the magnitude of the problem. The economic implications of specific intervention programs designed to solve the problem are reviewed. Caloric intake is closely associated with per capita income, and malnutrition characterizes the poorest segments of the population. Since the lowest-income groups have larger families, the incidence of malnutrition among children is certain to be higher than the incidence among adults. 3 factors will determine whether, on the basis of current trends, caloric malnutrition can be expected to be eliminated among the poorest segments of the population of the development countries: 1) the future income growth of the malnourished groups; 2) their propensity to use additional income to increase their caloric consumption; and 3) the future changes in the relative price of the main staples, basically cereals. The problem of malnutrition cannot be resolved quickly enough without explicit measures to raise the level of caloric consumption. Governments can initiate a wide range of programs and policies in an effort to augment the caloric consumption of children in the target population - transfer of cash to target households, target group oriented food programs, and food stamps for certain groups. In order for a food program to have more of an effect on consumption than would an equivalent transfer of income, 2 conditions need to be met: 1) the food must be made available at lower prices and in larger quantities than that previously consumed; and 2) reselling of the food must be precluded. In sum, the only effective solution for dealing with the problem of malnutrition among children of developing countries is either a more equitable distribution of income or supplying the food to the target population at a price far below its normally supply price.