Corporate ethical consulting: Developing management strategies for corporate ethics

The increase of scandals in the business sector is forcing many companies to examine their corporate ethical behavior with a view toward rebuilding their corporate value system. This article describes how value-system reconstruction must proceed in a company and demonstrates that corporate ethics can only become plausible if based on a corporate ethical ethos. It outlines a five-step development plan of management strategies toward rebuilding a company's value system on this corporate ethos through: corporate policy and strategy reformulation; corporate ethical code promulgation and value-statement formulation; management ethical training and corporate ethical education; and corporate ethical performance evaluation. The role of the corporate ethical consultant is also outlined to illustrate how corporate ethical consulting can provide the specialized services designed to insure an enduring management ethical upgrading and to improve a company's corporate ethical performance record. The discussion indicates how corporate ethical consulting promotes good business through its capacity to deliver industry credibility and company security. Richard Guerrette is a Research Fellow at Yale University Divinity School, where he is conducting a research study in organization management process and corporate ethics. He is also a Lecturer in sociology at the University of Connecticut at Hartford and is an author of two books on ecumenical ministry and social movement organization in the church. He has published extensively in theological journals and has recently contributed an article on Environmental Integrity and Corporate Responsibility for the Journal of Business Ethics 5 (1986). He is the Director of Equipax, an organization/management consulting service in Farmington, Connecticut.     

Price as a signal of quality: Canada in the international context

Studies have shown that price is very poorly correlated with quality. This paper discusses the methodological criticisms of the earlier work, concluding that the original results remain robust. Examination of 91 sets of Canadian products containing 1020 items reinforces the conclusions of earlier work for the United States and Japan. These international studies contradict the conventional wisdom that price is an adequate signal of quality. We also test the hypotheses that price is a better signal of quality (a) after product tests have been published, and (b) for higher priced items which presumably justify larger investments in search. Canadian data do not support either hypothesis. Some theoretical explanations are outlined and a conclusion briefly presents implications for policy.

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Der Preis als Qualitätsindikator: Kanadische und internationale Befunde

Zusammenfassung Zahlreiche Untersuchungsergebnisse haben gezeigt, daß Preis und Qualität in einem nur sehr dürftigen Zusammenhang stehen. Diese Befunde sind unter methodischem Gesichtspunkt kritisiert worden, der vorliegende Beitrag versucht jedoch zu zeigen, daß die Befunde robust sind und der Kritik standhalten können. Eine Untersuchung der Autoren anhand von 91 kanadischen Warentests mit 1,020 Artikeln bestätigt darüberhinaus die früheren Ergebnisse aus den Vereinigten Staaten und Japan. Insgesamt widersprechen diese internationalen Untersuchungen der herkömmlichen Ansicht, daß der Preis eines Gutes ein angemessener Qualitätsindikator sei.Darüber hinaus prüft die Studie der Autoren die Hypothese, daß der Preis ein besserer Qualitätsindikator ist, (a) nachdem Warentests durchgeführt und die Ergebnisse publiziert wurden, und (b) wenn es sich um teurere Produkte handelt, die vermutlich einen höheren Suchaufwand rechtfertigen. Beide Hypothesen werden durch kanadische Daten nicht gestützt. Abschließend werden einige verbraucherpolitische Implikationen dieser Befunde behandelt.The authors are grateful to referees for important assistance.

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Richard W. Bodell is Assistant Professor and Robert R. Kerton is Professor in the Department of Economics at the University of Waterloo, Waterloo, Ontario, Canada N2L 3G1. Richard W. Schuster is an economist with the Economics Department of the Bank of Nova Scotia in Toronto.     

On the smoothness of optimal paths II: some local turnpike results

We study the local turnpike property for two classes of infinite-horizon discrete-time deterministic maximization problems which have common applications, e.g., optimal growth theory. We follow a functional-analytic approach and rely on an implicit function theorem for the space of the sequences which converge to zero. We shall assume the existence of an optimal path which is not necessarily a steady-state. Relying on material developped in Blot and Crettez (Decis Econo Finance 27:1–34, 2004), “On the smoothness of optimal paths” Decis Econ Finance, 21:1–34, 2004), we provide conditions under which a variation in the initial conditions (i.e., capital stock and discount rate) yields an optimal solution which converges toward a reference solution when time becomes infinite. We also provide new results on bounded solutions of difference equations. We gratefully thank the editor, Silvano Holzer, and two anonymous referees for remarks and advices on a previous version of this paper.     

Progressive stress accelerated life tests under finite mixture models

In this paper, progressive stress accelerated life tests are considered when the lifetime of a product under use condition follows a finite mixture of distributions. The experiment is performed when each of the components in the mixture follows a general class of distributions which includes, among others, the Weibull, compound Weibull, power function, Gompertz and compound Gompertz distributions. It is assumed that the scale parameter of each component satisfies the inverse power low, the progressive stress is directly proportional to time and the cumulative exposure model for the effect of changing stress holds. Based on type-I censoring, the maximum likelihood estimates (MLEs) of the parameters under consideration are obtained. A special attention is paid to a mixture of two Rayleigh components. Simulation results are carried out to study the precision of the MLEs and to obtain confidence intervals for the parameters involved.     

The Impact of Survey Methodology and Context on Central Tendency,Nonresponse and Associations of Subjective Indicators of Government Performance

A comparison is given of (ordinal) measures of trust in government institutions that were collected with the aim of facilitating comparisons between different modes and contexts of data collection. Statistical analyses reveal that the mode effect could amount upto a 10% change of item nonresponse and a 9% change of the level of trust, whereas the context effect could lead upto a 19% change of the bivariate associations of trust. The observed changes of both measures of central tendency and of associations affect conclusions of social scientific research in isolated studies, which implies that comparative studies are seriously hampered by bias related to mode and context, two sources of obscurity adding to the two other threats which are differences of sample source and differences of question phrasing.     

Bedeutungswandel der Internen Revision in der internationalen Literatur: Corporate Governance,Risikomanagement und Bilanzskandale

Ohne Zusammenfassung     

Bestimmung von Kapitalkosten in diversifizierten Unternehmungen: Verfahrensvergleiche und Anwendungsempfehlungen

Die Notwendigkeit zur wertorientierten Führung und Steuerung von Unternehmungen gewinnt durch die zunehmende Professionalisierung der Kapitalmarktteilnehmer, die Basel-II-Richtlinien für Banken sowie die Neuregelung zum Goodwill Impairment weiter an Dynamik. Innerhalb der Wertkonzepte nehmen Kapitalkosten als zentraler „value driver“ eine herausragende Bedeutung ein. Vor diesem Hintergrund werden die unterschiedlichen Verfahren zur Ermittlung von Kapitalkosten, darunter auch das erst kürzlich vorgestellte Market-derived Capital Pricing Model, diskutiert und mittels eines zu entwickelnden Kriterienrasters systematisch miteinander verglichen. Schlie?lich entwickelt der Beitrag aus den Erkenntnissen des Verfahrensvergleichs sowie einer Expertenbefragung praktische Anwendungsempfehlungen.     

Characterizations of negative multinomial distributions based on conditional distributions

In this paper characterizations of negative multinomial distributions based on conditional distributions have been studied.     

Gestaltung der Abschlussprüferhaftung – Implikationen theoretischer Modelle

Business scandals such as Enron, WorldCom or Parmalat have sparked intense discussions on the quality of corporate governance as well as the trustworthiness of statutory auditors. It is therefore no surprise that regulators have issued a large number of new regulations concerning auditing. The civil liability of external auditors has not changed in Germany, but such changes have already been announced by the German government. An increase in the existing liability cap in cases of negligent misconduct and extended third-party liability are planned. As a consequence, the results of analytical research on this topic are highly relevant. This paper summarises and comments on prior analytical research, in particular its assumptions and results, and focuses on important elements for the design of a liability regime. To this end, the paper addresses the questions of joint–and-several vs. proportionate liability rules, negligent vs. strict liability regimes, the extent of third party liability, and limited vs. unlimited liability.     

The generalized Stackelberg equilibrium of the all-pay auction with complete information

We characterize the equilibrium of the all-pay auction with general convex cost of effort and sequential effort choices. We consider a set of n players who are arbitrarily partitioned into a group of players who choose their efforts ‘early’ and a group of players who choose ‘late’. Only the player with the lowest cost of effort has a positive payoff in any equilibrium. This payoff depends on his own timing vis-a-vis the timing of others. We also show that the choice of timing can be endogenized, in which case the strongest player typically chooses ‘late’, whereas all other players are indifferent with respect to their choice of timing. In the most prominent equilibrium the player with the lowest cost of effort wins the auction at zero aggregate cost. We thank Dan Kovenock and Luis C. Corchón for discussion and helpful comments. The usual caveat applies. Wolfgang Leininger likes to express his gratitude to Wissenschaftszentrum Berlin (WZB) for its generous hospitality and financial support.