Are Securitizations in Substance Sales or Secured Borrowings? Capital‐Market Evidence*

Two standard‐setting approaches have emerged globally to guide the choice of accounting for securitizations: the control and components approach (SFAS No. 125 and SFAS No. 140) and the risks and rewards transfer approach (IAS No. 39). A lack of consensus about derecognition accounting is a major impediment to achieving convergence in global standards that must be resolved. Thus, both SFAS No. 140 and IAS No. 39 will be reexamined, and evidence pertinent to the debate is timely and important. In this study, we present evidence consistent with the view of credit‐rating analysts, who view many securitizations as, in substance, secured borrowings. Specifically, for a sample of originators applying sale accounting guidance in SFAS No. 125 / 140 during the period 1997‐2003, we show that off‐balance‐sheet debt related to securitizations has, on average, the same risk‐relevance for explaining market measures of risk (that is, CAPM beta) as on‐balance‐sheet debt. We also find that, in a returns and earnings association framework, the pricing multiple on securitization gains declines as the amount of off‐balance‐sheet debt increases, implying that investors take off‐balance‐sheet debt into account when assessing the valuation‐relevance of such gains. For those who advocate the control and components approach to securitization accounting, our results suggest that, at least for frequent securitizers, the put option arising from implicit recourse is a “missing piece” that is not currently accounted for when calculating securitization gains. Our results challenge the extant measurement standards in SFAS No. 140.     

AN EVALUATION OF PROCESS‐ORIENTED SUPPLY CHAIN MANAGEMENT FRAMEWORKS

Supply chain management (SCM) is implemented by integrating corporate functions using business processes within and across companies. Several process‐oriented frameworks for SCM have been proposed but only two of these provide sufficient detail to enable implementation. We evaluate the Supply‐Chain Operations Reference (SCOR) framework and The Global Supply Chain Forum (GSCF) framework using four criteria and identify their relative strengths and weaknesses.     

The Contingent Value of Responsive and Proactive Market Orientations for New Product Program Performance*

While the benefits of being market oriented are largely accepted, a group of scholars and managers remain skeptical. Marketing scholars have sought to counter the criticisms leveled against market orientation (MO) by arguing that it has both responsive and proactive dimensions. However, few studies have empirically examined the complexity of the effects of these dimensions on firm performance. Drawing on theories of resource‐based advantage and organizational search behavior, this article advances understanding by arguing that responsive and proactive market orientations have curvilinear effects on product development performance, that their interaction may be positively related to product development performance, and that their effects on new product program performance are moderated differentially by the organizational implementation conditions and marketing function power. Survey results of 175 U.S. firms indicate support for most of the hypotheses. Specifically, whereas responsive MO has a U‐shaped relationship with new product program performance, proactive MO has an inverted U‐shaped relationship with new product program performance. Contrary to the arguments presented here, the interaction of both orientations is negatively related to new product program performance. This study finds that both orientations are needed; however, new product program performance is enhanced when one is at higher level and the other is at lower level. Finally, responsive MO is only positively related to new product program performance under specific conditions such as when strategic consensus among managers is high. On the other hand, the positive effect of proactive MO on new product program performance is further strengthened when learning orientation and marketing power are high. Overall, this study suggests that the effects of responsive and proactive MO on new product program performance are more complex than previously theoretically argued and empirically examined.     

Employment,schooling and productivity growth

Summary This paper presents an empirical analysis of labour demand and labour productivity growth in The Netherlands. Assuming an aggregate production function with as factors capital and 3 types of labour, distinguished by educational attainment, cost minimization leads to a set of 3 labour demand relations to be estimated on time series data. Using the estimates and the implied elasticities, aggregate labour productivity growth is decomposed into factor substitution, autonomous factors, labour time shortening, economies of scale, utilization rates and the increased educational level of the working population. The contributions of substitution, utilization rates and education appear to be substantial, notably in the seventies.

List of symbols

Variables a _i Efficiency index of skill leveli - C production - h _i working-time index for skill leveli - g _i steady-state growth rate of skill leveli - K capital stock - L _i employment volume of skill leveli - L _i ^* desired level of labour skill leveli - p output price - p ^* desired output price - s _i ^* long-run static labour shares in the production value - p _k rental price of capital - P index of total factor productivity - P _l index of labour productivity - u _i utilization rate of skill leveli - u _k utilization rate of capital - w _i wage rate for skill leveli - y production volume - y _yij Hicks partial elasticities of complementarity - _i steady-state cost share of skill leveli - _k Bk steady-state cost share of capital - _f lf highest level price index in cost function nesting - _g 4 intermediate level price index in cost function nesting - _h 4 lowest level price index in cost function nesting - _i steady-state relative wage share of skill leveli - _ij Allen partial elasticities of substitution Parameters d _i l adjustment speed of skill leveli - d _p price adjustment speed - M mark-up on marginal costs - scale elasticity of production - _i distribution parameter in cost function,i = 3, g - _i distribution parameter in cost function,i = k, h - _i distribution parameter in cost function,i =1, 2 - _i autonomous labour productivity growth for skill leveli - _i cost share of skill level in base year - _f production cost index in base year - _i hours elasticity in labour efficiency index - group elasticity of substitution betweenL ₃ and (K, (L ₁,L ₂)) - _g Og group elasticity of substitution betweenK and (L ₁,L ₂) - _h 6h group elasticity of substitution betweenL ₁ andL ₂ We would like to thank B. Downey, G.M.M. Gelauff, A. Nieuwenhuis, J.M.M. Ritzen, J.C. Siebrand and an unknown referee for helpful comments on earlier drafts.     

Agricultural practices in Eastern Maputaland

The various agricultural practices employed in eastern Maputaland are described.

Agricultural strategies utilized in Maputaland are low in productivity but aim to minimize risk. The area is marginal for agriculture as soils are sandy and rainfall unreliable. Insects and plant diseases accentuate the problem. Infrastructure is lacking in the area. Traditional agricultural systems predominate.

Farming in the area is generally of a subsistence nature and can be divided into gardening, swamp farming and field cropping. Steps towards modernization of agriculture must take into account all existing constraints.     

How to handle donor complaints

Responding to donor complaints takes great care. But know who's complaining and keep things in perspective.     

Policies for economic growth

Summary The old growth theory of the 1950s led to certain conclusions about the sorts of economic policies that would promote economic growth, and also about their limitations. The new growth theory of the 1980s makes much stronger assumptions and leads to correspondingly stronger conclusions about the scope of growth-promoting policy. This article argues that: (1) empirical work so far has neither confirmed nor denied the strong assumptions underlying the new theory; (2) the theory is worth pursuing because of its intrinsic interest and the possibilities it opens up; (3) whatever the final verdict on the new theory, both theory and evidence support the belief that significant long-run gains, even if not permanent changes in the growth rate, can be achieved by increased investment in the broadest sense, including human capital, technological knowledge, and industrial plant and equipment.Fifth Tinbergen Lecture delivered on October 4, 1991, in Amersfoort for the Royal Netherlands Economic Association     

The role and place of research and intellectual discourse in the reproduction of social relations of racial domination in South Africa

The South African research community which undertakes all research activity in the social and natural sciences, with and without state and corporate sponsorship, draws its membership mainly from the dominant social group. In this country, the dominant group is both economically and racially determined. Consequently, the white minority dominates the research community and intellectual discourse as it does other socio‐economic and political spheres of society. This situation guarantees the constant reproduction and perpetuation of the social relations of racial domination.

As an agent that generates knowledge and new ideas, research as an academic and intellectual tool of enquiry is an instrument of social control, producing new concepts, language and theoretical abstractions which are not accessible to those outside its multi‐farious disciplines. Insofar as the largest proportion of practitioners of these specialised disciplines is drawn from the dominant group, research has itself become a pivotal part of the dominant ideology. Its role is inevitably and inextricably bound up with the processes of systematic reproduction of the relations of domination.

The aim of this viewpoint is therefore to explore various ways in which research bodies and intellectual discourse in general in South Africa can be deracialised and be made more representative of the social make‐up of society.