Extent of diversification and company performance: The New Zealand evidence

This paper confirms the relative superiority of related-diversification in terms of the financial performance of New Zealand companies, companies which are much smaller and less diverse than those which normally feature in this literature. To facilitate comparisons with other studies, financial performance is measured in three ways: return on equity; return on assets; and sales growth. Other independent variables controlled for are company size; risk; leverage; technological opportunity; and industry concentration. The effective rates of protection afforded manufacturing industries (export subsidies and import tariffs) are also confirmed as having had some positive bearing on company performance.     

Testing the effectiveness of regulatory interest rate risk measurement

A depository institution's interest rate risk (IRR) exposure is the sensitivity of its earnings or market value of equity to changes in interest rates. Since the mid-1980's, bank regulators have developed broadly applied, centralized IRR models which are used to help assess individual institutions' capital adequacy. This paper tests the effectiveness of the earliest of these regulatory IRR models: the incomegap estimates calculated by the Federal Home Loan Bank Board (FHLBB) during the latter 1980's. Despite the many problems caused by the broad application of generic assumptions and the presence of embedded options, we find that the FHLBB gap estimates provided a significant measure of IRR exposure. We believe that these results bode well for the success of ongoing, more sophisticated regulatory modeling efforts.     

Union status and merger activity in the U.S.

Theories on merger activity and union membership suggest that conglomerate mergers should enhance the probability of managers employing nonunion workers, while nonconglomerate mergers should be associated with a greater probability of union membership. To test this hypothesis, a standard sample-selection derived union status equation is estimated which includes measures of three types of merger activity as explanatory variables. The findings suggest that being in an industry with substantial conglomerate mergers reduces the chance that a worker is a union member. All other types of mergers are positively associated with the probability of union membership. This pattern holds even after controlling for the possibility of merger endogeneity.     

The budgetary links of the Irkutsk oblast fuel and energy complex: An analysis

The links between the fuel and energy complex and the consolidated budget of Irkutsk oblast are examined; the budget balance of income and expenditure is evaluated in relation to the development of the fuel and energy complex; and factors affecting the budget proceeds from the energy sector and the related energy-intensive sectors are analyzed.     

The Equilibrium Rate of Unemployment in the Netherlands

The rise in unemployment in the 1970s and its subsequent persistence have challenged the conventional wisdom embodied in the standard Phillips curve, namely that equilibrium unemployment is fairly constant over time. This paper attempts to explain the apparent non-constancy of equilibrium unemployment by developing and estimating a structural model in which equilibrium unemployment is endogenous and results from the interactions of wage bargaining and the price and employment determination of firms. We find that the three major determinants of equilibrium unemployment are tax rates, the replacement rate and the real interest rate. The rise in unemployment in the 1970s and early 1980s was mainly due to a rise in the first two factors. That equilibrium unemployment remained high when tax rates and the replacement rate were reduced in the 1980s and early 1990s is attributed to the rise in real interest rates during this period.     

The Influence of Ownership and Compensation Practices on Charitable Activities

Recent accounting research provides evidence that similar profit‐based compensation incentives are used in for‐profit and nonprofit hospitals. Because charity care reduces profits, such incentives should lead for‐profit hospital managers to reduce charity care levels. Nonprofit hospital managers, however, may respond differently to the same incentives because they face a different set of institutional pressures and constraints. We compare the association between pay‐for‐performance incentives and charity care in for‐profit and nonprofit hospitals. We find a negative and significant association between charity care and our proxy for profit‐based incentives in for‐profit hospitals, and no significant association in nonprofit hospitals. These results suggest that linking manager pay to profitability does not appear to discourage charity care in nonprofit hospitals. Apparently, the nonprofit mission, institutional pressures, and ownership constraints moderate the potentially negative effects of profit‐based incentives. Because this evidence partially alleviates concerns over nonprofit compensation arrangements that mirror those used in for‐profit hospitals, it should be of interest to regulators and policymakers. In addition, this study provides insights into accounting researchers about institutional and organizational influences that affect managerial responses to financial incentives in compensation contracts.