Unobserved heterogeneity in stochastic cost frontier models: an application to Swiss nursing homes

Housing price-to-income and price-to-rent ratios are among the most widely monitored indicators of housing market conditions. While these ratios tend to fluctuate around a constant level or a mild trend over the long term, they also tend to deviate from these benchmarks for protracted periods. Traditional unit root tests often indicate the presence of a unit root. This article uses the framework of fractional integration to test the persistence of price-to-income and price-to-rent ratios in a sample of 16 OECD countries spanning four decades. The results indicate that the ratios are highly persistent. The possibility that persistence estimates may be affected by structural breaks in the series is also considered, but evidence of such breaks is found only in a very limited number of cases. Policy action may be required if high price-to-income and price-to-rent ratios have adverse social and economic consequences. Policies should be guided by a careful analysis of the factors behind high ratios.     

AN EMPIRICAL ANALYSIS OF CHILD CARE DEMAND IN SWITZERLAND

ABSTRACT ** :  This paper analyzes the demand of Swiss families for child care facilities. A choice experiment is used to study the effects of the facilities' characteristics as well as socio-economic factors on the selected child care mode. The experimental data are analyzed using a discrete choice model with multinomial logit specification. The results suggest that the demand for extra-familial day care could be considerably higher than that observed from the actual choices constrained by insufficient provision of affordable day care. The price, access, and the quality of service as well as parents' income and education have important impacts on the choice of the mode of care.     

Development of financial reporting environment in Malaysia

The purpose of our paper is to examine the development of the financial reporting environment in Malaysia. We explore the influence of environmental factors such as social, political, economic, legal and cultural in the development of accounting and Malaysia’s recent move towards the adoption of International Financial Reporting Standards (IFRS). We find that Malaysia’s colonial past and the reformation of corporate governance have significantly influenced the country’s financial reporting practices. Although there are a number of reforms in place more needs to be done in order to improve the transparency of corporate financial reporting practices in Malaysia. Our conclusion suggests the necessity to improve the quality of financial reporting practices and to build the confidence of stakeholders and potential investors. The findings of our study are particularly important to the standard-setters, regulators and accounting professionals to improve the financial reporting practices in Malaysia and other developing countries throughout the world.     

The influence of the introduction of accounting disclosure regulation on mandatory disclosure compliance: Evidence from Jordan

This paper examines the influence of accounting disclosure regulation, governance reforms and ownership changes, resulting from privatisation, on mandatory disclosure compliance of a sample of 80 non-financial, listed Jordanian companies for the years 1996 and 2004. Employing two checklists based on the International Financial Reporting Standards (IFRS) extant in the years 1996 and 2004, we find that disclosure compliance with the IFRS is significantly higher in 2004 than that in 1996. Our multiple regression results indicate that disclosure regulation reforms produced the most significant influence on mandatory disclosure compliance. Further, governance reforms through the mandate of audit committees emerged as a significant determinant of compliance with mandatory disclosure requirements.     

Contract farmer and poultry farm efficiency in Bangladesh: a data envelopment analysis

The objective of this article is to determine the efficiency of the poultry farm in Bangladesh and to assess the influence of contract farming system, using a data envelopment analysis. Seventy-five commercial poultry farms (25 and 50 independent and contract farms, respectively) were randomly selected. The results reveal that efficiency scores vary across sample farms. To explain some of these variations, the efficiency scores were regressed on some human capital variables and farming system using a Tobit model. The study also estimates elasticities to provide the information on the magnitude of the influence of variables on Technical Efficiency (TE), Allocative Efficiency (AE) and Economic Efficiency (EE). The results show that the contracting system is positively and significantly related to the farm's TE, AE and EE. This is expected because under contractual agreement, in order to obtain sufficient supplies of the right quality of poultry meat at the right time, the company provides technical know how assistance through company's recruited supervisor, production inputs and services, and production credit along with intensive supervision, which in turn improves farm efficiency. Thus, by receiving technical know how contract farmers have gained more knowledge on their resource and practices, which enables them to use resources more efficiently. Empirical results can provide crucial information to policy makers that improve poultry farm efficiency.     

An Empirical Analysis of Cost Efficiency in Non‐profit and Public Nursing Homes

Abstract *** :  This paper examines the issue of cost‐efficiency in Switzerland's nursing homes, an issue of concern to policy makers because of the rapid growth of elderly care expenditure and the aging of the population. The fact that nursing homes in Switzerland exist in different institutional forms, private for‐profit, government and non‐profit status, raises the issue of their relative cost efficiency. A panel data of 17 public and 19 nonprofit nursing homes operating over the 9‐year period from 1993 to 2001, in one of the 26 Swiss cantons, Ticino, is studied. Ticino's nursing homes are heavily regulated and monitored by the canton's authorities. However, given that in public firms there are more bureaucratic constraints and agency problems, one can expect a relatively low level of cost‐efficiency. In this paper the effect of institutional form on efficiency is studied using a translog stochastic cost‐frontier model. Several specifications are used to study the robustness of the results. The results suggest that the institutional form influences the efficiency of the studied nursing homes in that non‐profit foundations are likely to be more cost‐efficient than the nursing homes operated by government administration. The results also suggest that a great majority of the nursing homes in the sample do not fully benefit from scale economies. This implies that efficiency gains can be obtained with larger capacities or joint operations .     

The value relevance of corporate voluntary disclosure in the Middle-East: The case of Jordan

We examine whether higher voluntary disclosure, resulting from privatization and the accompanying governance reforms, enhances the value of privatized Jordanian firms. We use panel data for 243 firm-year annual reports (over a period of 9 years from 1996 to 2004) and employ univariate and multivariate tests in order to test our hypothesis,. We construct a governance index to proxy for the impact of privatized firms’ governance on voluntary disclosure. Also, we control for the endogeneity of voluntary disclosure in its relation with firm value. Our multivariate results indicate that voluntary disclosure is positively associated with firm value. We also find that firm value is associated with industry types as a proxy for size. However, we did not find that growth and liquidity are associated with firm value.     

Regulation and Measuring Cost-Efficiency with Panel Data Models: Application to Electricity Distribution Utilities

This paper examines the performance of panel data models in measuring cost-efficiency of electricity distribution utilities. Different cost frontier models are applied to a sample of 59 utilities operating in Switzerland from 1988 to 1996. The estimated coefficients and inefficiency scores are compared across different specifications. The results indicate that while the average inefficiency is not sensitive to the econometric specification, the efficiency ranking varies significantly across models. The reasonably low out-of-sample prediction errors suggest that panel data models can be used as a prediction instrument in order to narrow the information gap between the regulator and regulated companies.     

Female directors on the board and cost of debt: evidence from Australia

We examine whether the presence of female board members has any impact on the cost of debt among Australian listed companies. We find that female presence on the board is negatively associated with the cost of debt. Most importantly, our findings support the argument of critical mass theory that a certain threshold of gender balance is required for enhancing board effectiveness. Our results are valid irrespective of alternate model specifications and endogeneity issues. Overall, the results provide support to the ASX Corporate Governance Principles and Recommendation for the appointment of female directors on corporate boards.