Moral Hazard,portfolio allocation,and asset returns for thrift institutions

This article examines the earnings performance of nontraditional assets allowed to thrifts since the early 1980s. It uses the statistical cost accounting methodology developed by Hester and Zoellner to estimate average returns on thrift portfolio investments for the years ending June 30, 1987 and June 30, 1988. Results show that average returns on land loans, service corporation investment, real estate investment, and commercial loans were significantly lower than returns on more traditional assets. The results are far more pronounced at capital deficient institutions, lending support to the hypothesis that they used nontraditional investments as a means of exploiting the deposit insurance system. Returns on nontraditional assets are significantly affected by geographic factors, even for well capitalized institutions. The article concludes with an evaluation of the reimposition of portfolio restrictions on thrifts by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.The views expressed in this paper are those of the authors and do not necessarily represent the views or opinions of the Federal Housing Finance Board, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation. George Benston, Tom Fomby, Allen Berger, John Wolken, and anonymous referees made numerous constructive suggestions.     

Modeling Conditional Yield Densities

Given the increasing interest in agricultural risk, many have sought improved methods to characterize conditional crop-yield densities. While most have postulated the Beta as a flexible alternative to the Normal, others have chosen nonparametric methods. Unfortunately, yield data tends not to be sufficiently abundant to invalidate many reasonable parametric models. This is problematic because conclusions from economic analyses, which require estimated conditional yield densities, tend not to be invariant to the modeling assumption. We propose a semiparametric estimator that, because of its theoretical properties and our simulation results, enables one to empirically proceed with a higher degree of confidence.     

Decentralization and Pay Reform in Central Government: a Study of Three Countries

Over the past decade central governments of the UK, Sweden and Australia have been engaged in significant reforms in the way they pay their employees. These reforms have generally taken the form of the decentralization of pay bargaining and the individualization of pay. This paper details the policies that have been implemented in central government in these countries and presents some preliminary results on the effects of these. While the actual implementation has varied quite substantially across the countries and the analysis of the outcomes must be regarded as preliminary, there is some evidence that the reforms have led to an increase in earnings dispersion.     

Race,revenues, and college basketball

Customer discrimination may result in racial differences in the marginal revenue products generated by workers. College basketball data allow for direct comparisons of the racial differences in the marginal revenues generated by players. This article compares the revenue generating potential of the top black and white college basketball players. A highly skilled white college player generates over $100,000 in per game revenues as compared to around $30,000 for a black player of equal talent, providing a strong incentive for colleges to discriminate against recruiting black student-athletes.     

Consistency of UK Pension Fund Investment Performance

Transition matrix techniques are used to relate the past and present performance of pension fund portfolios. In particular, funds are ranked to study the tendency of portfolios to remain in the same quartile of the ranking as they were in the previous period. For raw returns, funds in both of the top quartiles are found to be more likely to remain in the same quartile than would be expected by chance. This result can be taken as limited evidence for the consistency of performance. Similar systemic effects are observed on a risk-adjusted basis. There appears to be clear evidence that some fund managers can offer a degree of consistent good performance.     

RECEIPT OF INFORMATION AND INFLUENCE OVER DECISIONS IN HOSPITALS BY THE BOARD, CHIEF EXECUTIVE OFFICER AND MEDICAL STAFF

This article examines relationships between receipt of internal administrative information in hospitals, influence over general management decisions, and the extent to which certain organizational characteristics predict the receipt of information by each of the three major groups in hospitals: the board, the CEO, and the medical staff. Using a US national sample of 287 non-profit community hospitals, CEOs were found to receive the greatest amount of information and had highest influence while medical staffs were lowest on both measures. of five major organizational characteristics, hospital size emerged as the single strongest predictor of receipt of information for both boards (beta =?0.28, p 0.001) and medical staffs (beta =?0.42, p 0.001). Overall, the five dependent variables explained 18 per cent of the variance in receipt of information by boards and 28 percent of the variance for medical staffs.     

AN EXAMINATION OF THE UNDERLYING DYNAMICS OF STRATEGIC DECISIONS SUBJECT TO UPWARD INFLUENCE ACTIVITY

This study examines the underlying dynamics of strategic decisions that are subject to upward influence activity. The results suggest that the strategymaking process deviates considerably from typical rational comprehensive approaches in that strategies are affected by: initial sense-making activity, perceptions of risk and return, and power and negotiation skills. Differences due to functional area of the manager involved in the influence activity are discussed.