The impact of PPS legislation on the systematic risk of hospitals

In 1983 the government passed legislation implementing a new method of paying hospitals for Medicare inpatient services, the Prospective Payment System (PPS). Under this system the changes in economic incentives to hospitals affected the market conditions under which hospitals operate. This article investigates the impact of PPS on the financial riskiness of hospitals. Using the capital asset pricing model (CAPM), this study analyzes the systematic risk of a portfolio of four publicly traded acute care hospitals in the pre-PPS and post-PPS periods, as well as four control portfolios. It covers a pre-PPS period from 1976 to the passage of the Tax Equity and Fiscal Responsibility Act (TEFRA) and a post-PPS period through 1988. The systematic risk for publicly traded acute care hospitals increased significantly in the post-PPS period. However, the control groups also showed significant changes in systematic risk.     

‘The bull is half the herd’: property rights and enclosures in England, 1750-1850

Common fields reduced the transaction costs for commoners’ cow keeping by lowering the cost of insemination. After enclosure, cow keeping fell among small owners who, unlike large farmers, could neither jointly own the bull and the cow nor lease the male easily. The minimum acreage required to restore cow keepers to their pre-enclosure economic position indicates that many commoners who were given some land at settlement were inadequately compensated for the change in property rights.     

Attracting investors for public health programmes with Social Impact Bonds

ABSTRACT

Social impact bonds (SIBs) have emerged as an innovative financing mechanism. This paper explores how health SIBs align with investors’ expectations and the conditions required to attract investors. At present, health SIBs are unlikely to provide sufficient financial returns given their financial risk to attract mainstream investors, so may be better suited to investors who are prepared to accept lower financial returns blended with particular health impact returns.     

Segmental Disclosure Practice: Thirteen Years On

In an age of financial disclosure directed by professional standards, the changes in practice voluntarily undertaken by companies are sometimes difficult to detect. By focusing on a period prior to the introduction of SSAP 25, the segmental disclosure issue offers an opportunity to consider whether practice has voluntarily changed. An examination of the extent and quality of segmental disclosure, for a specific group of companies over an extended period, offers an indication of the need for a standard or further regulation. If it can be demonstrated that disclosure practice has improved under a primarily self-regulatory framework, the need for a standard like SSAP 25 may be questioned. The segmental disclosure practices of the same group of seventy companies are compared for the reporting years 1975–6 and 1988–9. Whilst an underlying improvement in respect to business activity disclosure is revealed, the same cannot be claimed for geographic segmental disclosure. Not only has the number of companies reporting profit by geographic segment declined but also the consistency with other aspects of the annual report has reduced.     

Using Cultural Mindsets to Reduce Cross-National Auditor Judgment Differences

In a globalized audit environment, regulators and researchers have expressed concerns about inconsistent audit quality across nations, with a particular emphasis on Chinese audit quality. Prior research suggests Chinese audit quality may be lower than U.S. audit quality due to a weaker institutional environment (e.g., lower litigation and inspection risk) or cultural value differences (e.g., greater deference to authority). In this study, we propose that lower Chinese audit quality could also be due to Chinese auditors' different cognitive processing styles (i.e., cultural mindsets). We find U.S. auditors are more likely to engage in an analytic mindset approach, focusing on a subset of disconfirming information, whereas Chinese auditors are more likely to take a holistic mindset approach, focusing on a balanced set of confirming and disconfirming information. As a result, Chinese auditors make less skeptical judgments compared to U.S. auditors. We then propose an intervention in which we explicitly instruct auditors to consider using both a holistic and an analytic mindset approach when evaluating evidence. We find this intervention minimizes differences between Chinese and U.S. auditors' judgments by shifting Chinese auditors' attention more towards disconfirming evidence, improving their professional skepticism, while not causing U.S. auditors to become less skeptical. Our study contributes to the auditing literature by identifying cultural mindset differences as a causal mechanism underlying lower professional skepticism levels among Chinese auditors compared to U.S. auditors and providing standard setters and firms with a potential solution that can be adapted to improve Chinese auditors' professional skepticism and reduce cross-national auditor judgment differences.     

Flexibility in cash-flow classification under IFRS: determinants and consequences

International Financial Reporting Standards (IFRS) allow managers flexibility in classifying interest paid, interest received, and dividends received within operating, investing, or financing activities within the statement of cash flows. In contrast, U.S. Generally Accepted Accounting Principles (GAAP) requires these items to be classified as operating cash flows (OCF). Studying IFRS-reporting firms in 13 European countries, we document firms’ cash-flow classification choices vary, with about 76, 60, and 57% of our sample classifying interest paid, interest received, and dividends received, respectively, in OCF. Reported OCF under IFRS tends to exceed what would be reported under U.S. GAAP. We find the main determinants of OCF-enhancing classification choices are capital market incentives and other firm characteristics, including greater likelihood of financial distress, higher leverage, and accessing equity markets more frequently. In analyzing the consequences of reporting flexibility, we find some evidence that the market’s assessment of the persistence of operating cash flows and accruals varies with the firm’s classification choices and the results of certain OCF prediction models are sensitive to classification choices.     

The last taboo?: surfacing and supporting Emotional Labour in HR work

The emotional challenges Human Resource Professionals (HRPs) face, and the work they do in managing emotion in day to day HR practice, have largely gone unacknowledged and unsupported and yet is arguably HR’s most value-added activity. Through in-depth interviews and diary study, we uncover the emotion handling aspect of HR work. Specifically we explore Emotional Labour (EL) which, despite its centrality to HR work, remains under-researched in the HR context. By asking our participants to recount and reflect on emotive interactions, we examine HRPs’ use of EL in their relational work; how they come to learn the emotion display rules of their role; the strategies they use to cope with such emotional demands and the factors that help/hinder this process. Our contribution is to ‘surface’ emotion in HR work and identify how organisations can prepare HRPs for, and support them in, their emotion handling efforts.     

‘Taking on almost everyone?’ Migrant and employer recruitment strategies in a booming labour market

This paper explores the recruitment strategies of employers in the Irish Celtic Tiger boom labour market. It explores Irish employers' turn towards immigrants rather than pursuing other strategies such as raising productivity or mobilising alternative sources of labour. It demonstrates that during the boom years a more casualised approach to recruitment was favoured, privileging soft skills and competencies above credentialised skills. Immigrants became the employees of choice, not least because of issues of costs and obedience, but also because they brought new skills, in particular soft skills. Indeed, employers in some sectors developed a categorical preference for migrant workers as they recruited for attitude, work ethic and potential.