The effects of leveraged buyouts on corporate growth and diversification in large firms

This study investigates the effects of LBOs on corporate growth and diversification in large U.S. firms which underwent leveraged buyouts during the 1980s. Based on the analysis, this study found that revenue and employee growth are significantly lower in LBO firms than in control firms that remained public. Strategically, we find that LBO firms decreased the size of both their periphery and core businesses more than public control firms and that LBO firms divested a significantly higher volume of periphery and core businesses than control firms. These postbuyout differences between LBO and public firms are consistent with the argument that LBO firms provide managers with incentives to downsize and prune lines of business, resulting in reduction in overall firm size and diversifcation.     

The competitive advantage of corporate philanthropy

When it comes to philanthropy, executives increasingly see themselves as caught between critics demanding ever higher levels of "corporate social responsibility" and investors applying pressure to maximize short-term profits. In response, many companies have sought to make their giving more strategic, but what passes for strategic philanthropy is almost never truly strategic, and often isn't particularly effective as philanthropy. Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company's image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context--the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company's long-term business prospects. Addressing context enables a company to not only give money but also leverage its capabilities and relationships in support of charitable causes. The produces social benefits far exceeding those provided by individual donors, foundations, or even governments. Taking this new direction requires fundamental changes in the way companies approach their contribution programs. For example, philanthropic investments can improve education and local quality of life in ways that will benefit the company. Such investments can also improve the company's competitiveness by contributing to expanding the local market and helping to reduce corruption in the local business environment. Adopting a context-focused approach goes against the grain of current philanthropic practice, and it requires a far more disciplined approach than is prevalent today. But it can make a company's philanthropic activities far more effective.     

Human information processing research in accounting: The state of the art

Accountant's interest in decision making is resulting in a growing body of research based upon theories and models from the psychology of information processing. This paper presents a classification of information processing variables which have been studied by psychologists which serves as a framework for organizing information processing research in accounting. It then reviews and evaluates the existing accounting literature based upon three research approaches: the lens model, probabilistic judgment, and cognitive style. Finally, directions for future research in this area are suggested.     

EVIDENCE ON THE EFFECT OF TAXES ON FIRMS' DECISIONS TO RETIRE DEBT EARLY

We examine the effect of marginal tax rates on the decision to retire debt early. Other factors that have been linked to the debt retirement decision are also investigated, including leverage adjustment and the value associated with the immediate recognition of a loss for tax purposes on early retirement. Results indicate that firms that retire debt early have lower marginal tax rates than firms that do not retire debt early. This finding is consistent with the proposition that firms are motivated to retire debt early by an incentive to reduce tax shields that cannot be used efficiently. Further, firms that retire debt early are more highly leveraged than firms that do not retire debt early. Evidence also suggests that some firms retire debt early at a loss to reduce currently taxable income.     

The Innovation impact model: a tool t0 study the impact of technological change

In the spirit of the US Malcolm Baldridge Quality Award, companies try to develop a strategy towards improving their operations. These companies look for assistance in assessing how new technology will help. While literature looks at innovations from different perspectives, the impact of innovations is rarely studied. This article offers the 'Innovation Impact Model' as a tool to help companies visualize the effects of innovations on their performance and competitive situation. Three example are provided in which the Innovation Impact Model has been applied. First, the impact of basic oxygen furnaces on the national steel industries of Japan, West Germany, and the USA is examined. Second, the impact of eletric are furnaces on the development of production costs at the Atlantic Steel Plant in Atlanta is studied. Finally, it is shown how 'voluntary restraint agreements' in the early 1970s had only a tempoorary impact on improving the trade postion of the US steel industry.     

Cost - effectiveness analysis in practice: A case study of domestic water supplies in an African country

British aid policy calls for a large proportion of the programme to go to the poorest people in the poorest countries. This case study illustrates ways in which project selection and appraisal can aid this aim for projects whose output is non-tradeable and non-marketed but which may often be important to a poverty-focused programme. It attempts to demonstrate a framework by which such projects can consistently be examined paying particular attention to their objectives, the nature of their beneficiaries, and the recurrent budgetary implications for the host Government.