Junk bonds,life insurer insolvency,and stock market reactions: The case of first executive corporation

The First Executive Corporation was the largest failure in the history of the life insurance industry. The company was one of the most aggressive purchasers of junk bonds through the 1980s and was the first of several large failures in the staid life insurance industry. In this article, we examine the effect of First Executive's failure on the value of companies in the life insurance industry. We find that the price of other life insurance companies' stock is negatively affected by the earnings announcement that preceded First Executive's failure. The magnitude of an individual company's reaction to First Executive's loss varies according to the proportion of the company's assets invested in junk bonds, the proportion of the company's assests invested in real estate, and the financial strength of the company as measured by A.M. Best's rating.     

Conflicts and complementarities in the objectives of manpower policy: an illustration

The notion that policy-makers may encounter problems of conflict in the simultaneous pursuit of macro-economic objectives has accounted for a sizeable segment of the economics literature in recent years. In the academic context, this conflict has attracted considerable attention, generally in the form of the well-known Phillips-curve relationship. Non-academic opinion has also been reasonably well-informed as evidenced by the apparently widespread understanding of the inflation-unemployment trade-off dilemma.     

Sociological versus strategic factors in bargaining

Most game-theoretic models of strategic interaction, indeed most economic models of any sort, specify potential outcomes entirely in terms of the preferences of the agents, as captured in their (possibly cardinal) utility functions. The underlying assumption is that the outcome of such interactions is determined entirely by these preferences, together with the strategic possibilities available to the agents. The purpose of this paper is to challenge the adequacy of this assumption in general, by investigating it in the specific context of two-person bargaining. In particular, we consider whether certain experimental results reported earlier can be accounted for strictly in terms of players' preferences and strategic possibilities, and we report a new experimental study designed to answer this question. The results strongly support the conclusion that sociological factors, unrelated to what we normally consider to be the ‘economic’ parameters of a game, can decisively influence the outcome of bargaining, in a systematic manner.     

A WHEAT POLICY FOR THE SEVENTIES*

A study of the origins of the wheat surplus problem in Australia suggests that more far-reaching adjustments in national wheat policy are required than those currently envisaged. Ten specific recommendations for the reform of the present policy are outlined. A new form of income stabilisation scheme is proposed.     

Dear white boss. Do you remember that first management-team offsite

It's easy for white managers to assume that their colleagues of color face the same basic challenges they do. On one level that's true--the work itself is the same. But on another level, African-American managers often contend with an atmosphere of tension, instability, and distrust that can be so frustrating they lose the desire to contribute fully. Their white bosses and coworkers are simply unaware of the "miasma" and are often puzzled when African-Americans quit apparently for no reason or seemingly overreact to a minor incident. This portrayal of what it's like to be different in the workplace takes the form of a fictional letter from a black manager to a white boss. The letter, based on interviews and surveys the authors conducted with hundreds of mid- to senior-level African-American managers, is not about the lack of role models or mentors of color or any of the other barriers that limit opportunities for blacks in corporate America. Instead, the letter sheds light on the realities that lurk below the surface for black managers--the feeling that they leave some part of their identities at home and the sometimes subtle and often systemic racial biases that inhibit and alienate African-Americans. "Differences really do matter, although they may matter in ways you probably didn't expect. One of the big ways they matter is that race is always with us," the letter writer observes. "As a friend of mine said recently, 'I don't think a day goes by that I'm not reminded that I'm black.'" The letter may not apply to every leader, black or white, or to every organization, but the issues are more widespread than corporate America cares to acknowledge. It should be required reading for all white executives who don't want talent to slip through their fingers.     

Microcapitalism and the mega-corporation

More than 100 miles from Bangalore, India, there's a rural area called Kuppam where one in three citizens is illiterate, more than half of the households have no electricity, and there's a high rate of AIDS. It's exactly this challenging atmosphere that prompted Hewlett-Packard to choose Kuppam as one of its first "i-communities" initiatives. Through the program, HP creates public-private partnerships to accelerate economic development through the application of technology while simultaneously opening new markets and developing new products and services. HP brings to these initiatives the management disciplines of a successful technology business. For example, it unearths customer needs using an iterative cycle that involves prototyping products and services and then closely observing residents' experiences with them. It fields a diversely talented team that brings many skills to the initiative, including deep technical ability, management acumen, and market knowledge. It takes a systems approach, simultaneously examining all the elements that must come together to create a working solution to a given problem. It establishes a "leading platform" on which other players--comapnies, nonprofits, and government agencies--can build technologies and applications. Practices like these help ensure that HP's investment yields real, sustainable results for the community in question. But HP also sees returns to its own business. In Kuppam, the company is discovering the need for (and developing) new products like a solar-powered digital camera, with printer, that fits in a backpack. By engaging the community and its leaders and working with them to design valuable new tools and capabilities, HP is gaining the knowledge it needs to be a stronger competitor in other developing regions.     

The ‘Myth’ of Human Resource Management in Chinese Enterprises

This study examines changing labour-management practices in China's state-owned enterprises (SOEs) in comparison with those in joint ventures (JVs). Based on a sample of 62 firms in seven Chinese major cities, it explores the degree to which HRM practices are a ‘myth’. The researchers carried out semi-structured interviews with managers and other employees at all levels. The role of trade unions and workers' congresses are also examined. The results show that the ownership type, size of the firm, and its location are important factors affecting the extent to which these enterprises have adapted to market-orientated HRM practices. The study concludes that most firms have not fully made this adaptation, and that even where it has been taken up, it has in many cases only been done so partially due to organizational inertia, amongst other factors.     

Takeovers and Corporate Governance: Whose Interests Do Directors Serve?

Using internal records of board meetings, this research explores issues relating to the motivation of directors' action during takeover negotiations. The records relate to a time period when regulation was low and directors had ample opportunity to engage in adverse selection and moral hazard. In such circumstances, it might be supposed that they would have sought to protect their own tenure rather than seek to maximize shareholder wealth by recommending acceptance of a bid. However, in the case study under examination the directors worked hard to maximize the bid price by auctioning the company despite having little equity exposure themselves. The directors also sought to protect the interests of the staff when negotiating with bidders. Intentionally this behaviour was not disclosed to the shareholders and, on occasion, threatened the success of the negotiations. The article concludes that the actions of the directors were motivated by strong reputational effects not widely recognized in the contemporary literature as being a force that powerfully drives corporate governance.     

Human resources in Sino-foreign joint ventures: selected case studies in Shanghai,compared with Beijing

This article examines HRM in joint ventures (JVs) in Shanghai compared with those in Beijing using a case-study approach. It focuses primarily on issues relating to labour contracts, rewards and benefits, social insurance, trade unions and personnel policies, and describes current developments in China in each of these areas. In order to place these JV human resource practices in context, we also draw on interviews in state-owned enterprises (SOEs) in Shanghai and Beijing. Taking as a starting point a summary of traditional SOE 'iron rice-bowl' ( tie fan wan ) practices in the management of personnel, we ask to what extent HRM in the present JV sample differs from traditional methods and to what extent 'iron rice-bowl' practices continue despite foreign ownership. The extent to which HR practices in JVs are distinct from those in contemporary SOEs is also examined. We conclude that, although, as one would expect, foreign ownership has modified traditional practice, the degree and extent to which this is true varies widely. There is strong evidence of institutional and organizational continuity in 'iron rice-bowl' practices in both JVs and SOEs. Finally we propose a framework for categorizing the companies investigated in terms of their distance from traditional 'iron rice-bowl' HR practices and proximity to 'imported' practices. This consists of two 'pure' and two hybrid categories: pure 'iron rice-bowl'; hybrid I (predominantly local); hybrid II (predominantly imported): and, finally, pure imported. In this schema, the companies examined do not however group neatly according to whether they are JVs or SOEs.