Cost Accounting for War: Contracting Procedures and Cost-plus Pricing in WWI Industrial Mobilization in Italy

The aim of this paper is to explore the role played by cost accounting in Italy's Industrial Mobilization system and in the largest firm manufacturing weaponry, Ansaldo of Genoa, during WWI. While in other countries such as the UK and the USA, efficiency in buying and managing war material was an important part of military strategy, in Italy, various factors impeded it. This paper focuses on contracting procedures adopted by the Ministry of War and Ministry of Munitions and looks at the cost accounting practices in Ansaldo to see how costs were determined and how prices were set. We found a paradox. On the one hand, despite knowledge of costing, the government did not impose cost controls on the producers of war material, nor on their profit rates. On the other hand, examining Ansaldo's cost sheets we discover they underestimated their production costs leading the firm to losses despite its favorable political position. This paper contributes to the theoretical debate about the relationships between accounting and war in the Italian context where lobbying, collusion, bribery and private interests dominated the administrative behavior of public and private actors instead of efficiency, accountability and honesty.     

Dynamic spatial autoregressive models with autoregressive and heteroskedastic disturbances

We propose a new class of models specifically tailored for spatiotemporal data analysis. To this end, we generalize the spatial autoregressive model with autoregressive and heteroskedastic disturbances, that is, SARAR(1, 1), by exploiting the recent advancements in score‐driven (SD) models typically used in time series econometrics. In particular, we allow for time‐varying spatial autoregressive coefficients as well as time‐varying regressor coefficients and cross‐sectional standard deviations. We report an extensive Monte Carlo simulation study in order to investigate the finite‐sample properties of the maximum likelihood estimator for the new class of models as well as its flexibility in explaining a misspecified dynamic spatial dependence process. The new proposed class of models is found to be economically preferred by rational investors through an application to portfolio optimization.     

Understanding solicitation: Beyond the binary variable of being asked or not being asked

The identity, motivation, and experiences of philanthropists have become increasingly popular topics of study in a wide range of disciplines, yet no equivalent attention has been paid to the askers, despite research showing that almost all donations are solicited in some way. The propensity to be asked for contributions has been found to be positively related to the propensity to give, but despite the usefulness of this finding, it reinforces the suggestion that solicitation is a binary variable, such that people are either asked or they are not asked. This paper, drawing on data from in-depth interviews with 73 successful fundraisers in the UK and Canada, highlights the importance of the quality, as opposed to simply the quantity, of solicitation. Three important factors that lie behind successful “asks” are identified and discussed: First, they are made within relationships of trust rather than as a result of a transactional approach. Second, they occur as a result of fundraisers' ability to be an “honest broker” between donors and the organisations they might support. And third, they rely on the fundraisers' skills in reframing complex issues and finding alignment between the recipient organisation's needs and the philanthropic aspirations of the donor. The paper concludes with implications for practice.     

Identifying new product development best practice

New product development (NPD) practitioners are keen to benchmark NPD practices because identifying any practice that is able to more efficiently and/or effectively deliver a new product could represent the difference between success and failure. A common purpose is therefore to identify NPD best practices with the expectation that companies will manifest and sustain these to augment their NPD efforts. To help in identifying such practices, we present a framework developed from prior benchmarking studies, a Delphi methodology with leading experts, and a survey involving over 300 NPD practitioners. The uniqueness of the framework lies in its ability to distinguish NPD practice across seven dimensions: Strategy, Research, Commercialization, Process, Project Climate, Company Culture, and Metrics/Performance Measurement. The framework is also unique in that across each dimension, poor NPD practices are listed as a starting point from which to improve, alongside best practices to which companies should aspire. To further assist in continuous improvement, an audit tool is derived from the framework, suggesting investigative questions that practitioners can ask to evaluate their company's NPD efforts. We conclude with general observations about NPD practice as the continued search for NPD best practice endures.     

Hospital Financial Conditions and the Provision of Unprofitable Services

Increases in hospital financial pressure resulting from public and private payment policy may substantially reduce a hospital’s ability to provide certain services that are not well compensated or are frequently used by the uninsured. The objective of this study is to examine the impact of hospital financial condition on the provision of these unprofitable services for the insured and uninsured. Economic theory provides the conceptual underpinnings for the analysis, and a longitudinal empirical analysis is conducted for an eight-year study period. The results indicate that not-for-profit hospitals with strong financial performance provide more unprofitable services for the insured and uninsured than do not-for-profit hospitals with weaker condition. For-profit hospital provision of these services is not influenced by their financial condition and instead may reflect actions to meet community expectations or to offer a sufficiently broad service array to maintain the business of insured patients.     

Jumps in cross‐sectional rank and expected returns: a mixture model

We propose a new nonlinear time series model of expected returns based on the dynamics of the cross‐sectional rank of realized returns. We model the joint dynamics of a sharp jump in the cross‐sectional rank and the asset return by analyzing (1) the marginal probability distribution of a jump in the cross‐sectional rank within the context of a duration model, and (2) the probability distribution of the asset return conditional on a jump, for which we specify different dynamics depending upon whether or not a jump has taken place. As a result, the expected returns are generated by a mixture of normal distributions weighted by the probability of jumping. The model is estimated for the weekly returns of the constituents of the SP500 index from 1990 to 2000, and its performance is assessed in an out‐of‐sample exercise from 2001 to 2005. Based on the one‐step‐ahead forecast of the mixture model we propose a trading rule, which is evaluated according to several forecast evaluation criteria and compared to 18 alternative trading rules. We find that the proposed trading strategy is the dominant rule by providing superior risk‐adjusted mean trading returns and accurate value‐at‐risk forecasts. Copyright © 2008 John Wiley & Sons, Ltd.