Financial Distress in the Great Depression

We use firm‐level data to study corporate performance during the Great Depression era for all industrial firms on the NYSE. Our goal is to identify the factors that contribute to business insolvency and valuation changes during the period 1928‐1938. We find that firms with more debt and lower bond ratings in 1928 became financially distressed more frequently during the Depression, consistent with the trade‐off theory of leverage and the information production role of credit rating agencies. We also document for the first time that firms responded to tax incentives to use debt during the Depression era but that the extra debt used in response to this tax‐driven “debt bias” did not contribute significantly to the occurrence of distress. Finally, we conduct an out‐of‐sample test during the recent 2008‐2009 Recession and find that higher leverage and lower bond ratings also increased the occurrence of financial distress during this period.     

Minimum Pay Scale and Career Length in the NBA

We use data from the National Basketball Association (NBA) to analyze the impact of minimum salaries on an employee's career length. The NBA has a salary structure in which the minimum salary a player can receive increases with the player's years of experience. The NFL has a similar minimum wage policy; research suggests that the introduction of this system shortened career length in the NFL. Using duration analysis, we fail to find evidence that the new multi‐tiered minimum wage scale in the NBA increased the probability of exit.     

The Nature of Business Planning Undertaken by General Practitioner Fundholding Practices in the North West Region

This article focuses on a central feature of the former Conservative Government's approach to the National Health Service (NHS), the introduction of General Practitioner Fundholding. It examines the nature of business planning undertaken by fundholding practices in the North West Region by looking at the participation of various stakeholders in the business planning process, the business planning techniques adopted and the extent to which fundholding practices set and monitor their objectives.     

Rainfall variability in tropical Africa: Some implications for policy

Rain is the basic ingredient for the existence of Africa and its people. This article introduces the ‘baseline’ rainfall climatology of Africa and looks at examples of fluctuations in the last 50 years. The author then puts forward some suggestions on the implications of such variability for planning and policy making.     

Strategic management accounting in close inter-organisational relationships

This paper provides a conceptual comparison between the ‘mainstream strategic management accounting’ literature, the ‘accounting and strategising’ literature and ‘strategic management accounting (SMA) in close inter-organisational relationships’. It concludes that ‘SMA in close inter-organisational relationships’ shares some important characteristics with the ‘accounting and strategising’ literature. Important differences were found, too, though. These mainly concerned the need to understand individuals working for close partners as preparers of strategic information; the need for disaggregated accounting information about unique connections to close partners and about the role of indirect benefits that follow from close connections and the need for the company to not only collect information but also disperse diverse information within close inter-organisational relationships. Through an intensive case study of a global robot manufacturer, Robotics, this paper also provides novel empirical evidence on ‘SMA in close inter-organisational relationships’. For instance, SMA practices included indirect benefits, something mainly neglected in the existing literature on SMA. These indirect benefits involved a close customer's willingness to invest time and effort in Robotics’ technological development, thereby contributing to Robotics’ ability to attain revenue gains in its interactions with other customers. Our findings also have important implications for the ‘inter-organisational accounting’ literature, for instance, by highlighting the need to link more explicitly strategic decision-making with the current interest in the role of accounting in inter-organisational dynamics.     

People's choice: Public spending,taxation and local rates

Elections may reflect ideological swings, but they do not enable voters to take account either of trade‐offs between spending programmes or of the price of extra spending in terms of higher taxes. No satisfactory way has yet been found of consulting voters on this point. Here is one suggestion.     

GDSS research: An overview and historical analysis

Group Decision Support Systems (GDSS) is a relatively new area of Information Systems research, but some patterns have begun to emerge in the focus of this research and in the approaches to conducting it. This article represents a substantial review of a large body of GDSS literature and an analysis of that literature according to a specific classification scheme. The dimensions of the classification scheme include the age of the research publication, the general research approach, the philosophy underlying the data collection, the type of GDSS support, whether the research is longitudinal, and the primary focus of the research, as well as a few demographic variables such as author and source. The results of the literature analysis lead to recommendations to GDSS researchers by the authors of a need for greater use of the available research approaches and other data analysis philosophies, a greater emphasis on field work, more longitudinal research, and some changes in the focus of the research.     

The Market and Efficient Resource Allocation

Graham Dawson, a very experienced teacher of economics at Bedford High School, gives the second in the series of Model Answers for 'A' Level economics.