SIR ALAN WALTERS' ROLE IN THE REVIVAL OF CURRENCY BOARDS1

In a speech given in 2004, at a meeting held at the Institute of Economic Affairs in honour of Sir Alan Walters who died in 2009, John Greenwood explains Sir Alan's critical role in the creation of a currency board in Hong Kong in 1983.     

Performance analysis of a focused hospital unit: The case of an integrated trauma center

The concept of focus [Skinner, W., 1974. The focused factory. Harvard Business Review 52 (3), 113–121], notably operationalized in manufacturing entities like cells and focused factories, has also been adopted by the health care industry. Examples include patient-focused care systems and product/service lines. Despite its longevity, there is a paucity of studies analyzing the focus concept and its link to performance, especially in health care. This research is aimed at enhancing our understanding of how a focus-based approach to organization redesign in health care affects processes and practices, and what operational, clinical, and financial outcomes result from such a change. The research setting is a single case site within a large medical center for which costs for trauma care used to exceed income. Using a structured framework, we document the design and operation of this physically and organizationally integrated Level I trauma care center and compare it to its preceding operation. Its pre- and post-conversion performance is analyzed using symmetric event windows covering three-year periods before and after the focused hospital unit (FHU) was established. Under a sizable increase in workload, we find no change in mortality, moderate improvement in length of stay, and a large improvement in net operating margins. Surprisingly, the latter stem not from reductions in cost but in sharply increased hospital reimbursements. Previous studies of hospital restructuring involving focused patient populations have not conclusively supported a positive link between focus and outcomes. However, this investigation of a specific FHU suggests, conceptually as well as quantitatively, that focus can be an attractive element in health care system design.     

The effect of general counsel prominence on the pricing of audit services

We investigate the effect of corporate general counsel (GC) ascension to the senior management team on the pricing of audit services. Prior research suggests that the GC position may have a significant influence in setting the tone at the top by promoting corporate integrity, ethics, and serving as a governance and monitoring mechanism, but also recognizes that prominent GCs may face ethical dilemmas, causing them to disregard professional responsibilities to curry the favor of the CEO and other executives. Using audit fees to proxy for audit engagement risk, we find a negative association between GC ascension to top management and audit fees. We investigate the mechanisms behind this relation and find GC ascension is associated with a reduction in both default risk and financial misstatement risk, which supports auditors’ perceived reduction in client business risk and audit risk, respectively.     

On the optimal timing of capital taxes

For many kinds of capital, depreciation rates change systematically with the age of the capital. Consider an example that captures essential aspects of human capital, both regarding its accumulation and its depreciation: a worker obtains knowledge in period 0, then uses this knowledge in production in periods 1 and 2, and thereafter retires. Here, depreciation accelerates: it occurs at a 100% rate after period 2, and at a lower (perhaps zero) rate before that. The present paper analyzes the implications of non-constant depreciation rates for the optimal timing of taxes on capital income. The main finding is that under natural assumptions, the path of tax rates over time must be oscillatory. Oscillatory tax rates are optimal when depreciation rates accelerate with the age of the capital (as in the above example), and provided that the government can commit to the path of future tax rates but cannot apply different tax rates in a given year to different vintages of capital.     

Experts against adverse selection: A note on the existence of equilibrium with costly appropriable information

The existence of competitive equilibrium in Laffont's (J. Econ. Theory10 (1975)) model of adverse selection with costly information is studied. The existence of an equilibrium with finite prices is demonstrated without unusual restrictions on preferences or the technology of information production. This is made possible by changing the way in which the behaviour of information producing agents is modelled, and allowing for some public information.     

High-Involvement Management and Pay in Britain

High‐involvement management practices have well‐established benefits for employers, but what do they do for employees? Using a nationally‐representative survey of British private‐sector workplaces, high‐involvement management is shown to be associated with higher pay. The wage premium is little affected by the choice of employee involvement practices (e.g., teams versus quality circles), but it appears only where employee involvement practices are supported by job security guarantees. Powerful trade unions increase the premium.     

Improving Estimates of Inequality and Poverty from Urban China's Household Income and Expenditure Survey

In urban China the Household Income and Expenditure Survey requires respondents to keep a daily expenditure diary for a full 12-month period. This onerous reporting task makes it difficult to recruit respondents, compromising the sample. This article uses monthly expenditure data from two urban areas of China to see if data collection short-cuts, such as extrapolating to annual totals from expenditure reports in only some months of the year, would harm the accuracy of annual expenditure, inequality and poverty estimates. Replacing 12-month diaries with simple extrapolations from either one, two, four or six months would cause a sharp increase in estimates of annual inequality and poverty. This undermines international comparisons of inequality statistics because no country other than China uses such comprehensive 12-month expenditure records. But a corrected form of extrapolation, based on correlations between the same household's expenditures in different months of the year, gives much smaller errors in estimates of inequality and poverty.     

Constructing meaning in the service of power: An analysis of the typical modes of ideology in accounting textbooks

This paper provides an analysis of the typical modes of ideology in introductory financial accounting textbooks and training materials. Drawing on Thompson's [Thompson JB. Ideology and modern culture: critical social theory in the era of mass communication. Cambridge: Polity Press; 1990] schema concerning the typical linguistic modes through which ideology operates, this research suggests that the operation of ideology is apparent within educational accounting texts, with particular strategies being more evident than others: in particular, the strategies of universalization, narrativization, rationalization and naturalization. Given the predominantly technical nature of introductory financial accounting textbooks and training manuals, the modes of ideology identified in the texts were often quite subtle; more specifically, the ideological characteristics displayed in each of the six texts analyzed were often expressions of implicit or taken for granted assumptions.