Operating efficiency of Canadian banks

This article assesses Canadian banks' ability to realize scale economies and cost complementarities in joint production. The Canadian banking system, with its 10 or so large banks and 50 smaller ones, offers a good database for a study of efficiency, especially since previous work suggests that the system's concentration has had little impact on system competitiveness. This article estimates a system of cost and cost share equations using Zellner's iterative seemingly unrelated regression technique, then evaluates scale economies and cost complementarities from the estimated cost functions' first and second partial derivatives. The article compares a model that classifies deposits as inputs with another that classifies them as outputs. The empirical findings indicate that deposits are better modelled as outputs than inputs; that Canadian banks organize to exhaust available sources of scale economies and economies in joint production; and that conclusions regarding scale economies and cost complementarities differ importantly according to whether deposits are modelled as inputs or as outputs.     

Limiting Auditors' Liability: The Potential Consequences

The recent revival of interest in the issue of limiting auditors' liability raises questions about the potential effect of such a limitation on auditors' performance. This paper considers the consequences of limited liability from the perspectives of contracting theory and economic arguments. We examine the potential effect of a reduction in auditors' liability on the standard of care or quality of service they provide, emphasising the "calculus of negligence" concept used by Australian courts. We consider the potential impact of reduced liability on the auditor's decision to shirk responsibilities (the moral hazard problem) and on the value placed on audit services. The analysis shows that placing a statutory cap on auditors' liability has the potential to reduce the effectiveness of bonding mechanisms; provide an avenue for divergent behaviour; lower the level of care provided by auditors; and decrease the value of audit services.     

Control of lipid oxidation in cooked ground beef with water and salts*

The effects of exogenous water and salts on lipid oxidation in ground beef were determined. Deionized water, salts, or both, were added to treatment samples. Salts used were sodium chloride, potassium chloride and sodium sulphate, all at 3% concentration. The Thiobarbituric acid (TBA) test was used to assess lipid oxidation. Addition of water at a 10% or 20% level had no effect on rancidity. Sodium chloride and potassium chloride reduced TBA numbers. Adding water to those samples containing potassium chloride and sodium sulphate raised moisture content.     

The evaluation stage in marketing decision making

Prior to making important decisions, marketing managers go through an evaluation process in which available alternatives are compared. Yet, no systematic discussion of the evaluation process exists in the marketing literature. This article reviews the marketing and behavioral decision theory literature in order to identify factors that may cause errors in the two fundamental elements of the evaluation process—the estimation of probabilities and the determination of the value of outcomes. Propositions are developed that specify circumstances in which marketing management decisions may be influenced by judgmental biases, and procedures are identified for debiasing such judgments.     

Up in the Air: GTE's Experience in the MTA Auction for Personal Communication Services Licenses

In late 1994, GTE, one of the largest telecommunications firms in the world, entered an auction for the rights to provide personal communications services (PCS) using the electromagnetic spectrum. The administering agency, the Federal Communications Commission, adopted a novel multiple-round format for the PCS auction. The format presented GTE with a complex bidding problem. This article describes how the GTE bidding team answered the following question: Given its budget and valuations and the information available about rival bidders, how should GTE bid to achieve the best attainable outcome?