Is the relationship between investment and conditional cash flow volatility ambiguous,asymmetric or both?

We investigate the effect of cash flow volatility on investment. Our evidence suggests that financially constrained firms decrease investment (i) when experiencing persistently high volatility; (ii) when experiencing both high volatility and negative cash flow growth realisations; and (iii) when holding low cash levels and experiencing both high volatility and a negative cash flow growth realisations. In financially unconstrained firms, the above effects are either not found or are of relatively low economic importance. Overall, our findings lend support to the financial flexibility literature and tend to contradict predictions of the real options literature.     

Computing optimal tax equilibria

This paper proposes a technique for computing optimal taxes in a full general equilibrium model. It is based upon a fixed point algorithm of the type that is widely used to solve Walrasian general equilibrium models. Computing an optimal tax equilibrium is more difficult than solving a general equilibrium model only to the extent that the derivatives of the social welfare function and of the consumer demand functions must be calculated in the former case. Solutions to several sample problems are provided to demonstrate the technique. They suggest that optimal tax rates are exceedingly sensitive to the specification of the model used to derive them.     

Taxes and the acquisition of depreciable assets: The Tax Reform Act of 1986 and the alternative minimum tax

Analysis of firm investment behavior during 1982–1993 shows that the Tax Reform Act of 1986 (TRA 86) Public Law No. 99-514 substantially affects both purchases and leases of depreciable assets. The changes in the regular corporate income tax rules are shown to lower asset acquisition. The effect of the alternative minimum tax (AMT) is found to vary with the debt share in firms’ capital structure and with the frequency of AMT exposure during the life of the assets acquired. On average, TRA86 depresses asset purchases less for firms that are subject to the AMT: AMT somewhat mitigates the negative effects of the regular tax rules.     

Foreign direct investment and its impact on the Thai economy: the role of financial development

This paper examines the roles of foreign direct investment and financial development in the process of economic development using Thailand as the case study. We argue that better developed financial systems allow an economy to exploit the benefits of foreign direct investment more efficiently. The estimation draws upon an unrestricted error-correction model to avoid omitted lagged variable bias, and an instrumental variable estimator to correct for endogeneity bias. Using annual time series data from 1970 to 2004, the results show that financial development stimulates economic development whereas foreign direct investment impacts negatively on output expansion in the long run. However, an increased level of financial development enables Thailand to gain more from foreign direct investment, suggesting that the impact of foreign direct investment on output growth can be enhanced through financial development. The results are robust to different measures of financial development.      

Evidence of Asymmetric Information in the Automobile Insurance Market: Dichotomous Versus Multinomial Measurement of Insurance Coverage

In the empirical analysis of information asymmetry in automobile insurance markets, prior research used a dichotomous measurement approach that induces excessive bundling in coverage measurements and sample selection biases. To improve on the conditional correlation method for testing information asymmetry, we propose a multinomial measurement approach that constructs coverage categories at ordered multinomial levels. With this approach, we find robust evidence of information asymmetry in both coverage area and coverage amount choices, which we could not find with the dichotomous measurement approach. It thus demonstrates the sensitivity of the empirical findings to the method used to measure insurance coverage.     

Espoused drum-buffer-rope flow control in serial lines: A comparative study of simulation models

This paper documents an investigation of drum-buffer-rope (DBR) scheduling and flow control methodology in single-product serial production lines. In particular, DBR flow control is reviewed and the importance of correctly representing this type of flow control mechanism in serial lines is discussed. Departures from valid DBR conceptual and simulation modeling are illustrated. It is shown that the model of a previously published paper is a push system not a DBR system, and that related conclusions regarding protective capacity and constraint location are unsupported. Correct modeling of DBR flow control is shown using discrete simulation experiments that compare the DBR model and a similar push model. Suggestions for additional research are offered.     

A multivariate analysis of work–life balance outcomes from a large‐scale telework programme

A multivariate analysis identified six predictors to explain positive work–life balance (WLB) among 1,566 teleworkers. Time flexibility variables were found to be most dominant. Gender or having dependent children was not significant. These results demonstrated that controlling working hours was the most important ability for sampled teleworkers to achieve positive WLB.     

Organizational form and environment: an analysis of between‐form and within‐form responses to environmental change

This study extends previous research on organizational adaptation to major environmental shifts by empirically examining the potential constraining effects of organizational form, operationalized using the Miles and Snow typology, on the type of responses enacted as well as the performance effects of the responses. Results indicate that a fit between environmental contingencies and organizational form relates to superior performance. The results also provide support for the idea that organizations systematically move toward the higher‐performing forms for a given environment. Consistent with organizational configuration logic, while these responses lead to performance improvements when a between‐form change is made, they do not necessarily lead to performance improvements when a within‐form change is made. Copyright © 2000 John Wiley & Sons, Ltd.