Hierarchy vs. partnership

Simple organizations, composed of operatives and one manager, may be organized as a hierarchy with the manager appropriating all profits or as a partnership with (say) equal shares of profits. Conditions on profitability and the optimal span of control are analyzed. Next, partnerships are considered and alternative incentives and distributions are compared. When partners are free to choose their time inputs, then a sufficiently high preference for leisure as against income will make a partnership more attractive even though it is less profitable.     

Real business-cycle theory : Wisdom or whimsy?

This paper assesses the empirical plausibility of the view that aggregate productivity stocks account for most of the variability in post-World War II US output. We argue that the type of evidence forwarded by proponents of this proposition is too fragile to be believable. The answer could be 70% as Kydland and Prescott (1989) claim, but the data contain almost no evidence against either the view that the answer is really 5% or that the answer is really 200%. Moreover point estimates of the importance of technology shocks are extremely sensitive to small perturbations in the theory. Depending on the sample period investigated, allowing for labor-hoarding behavior in an otherwise standard RBC model reduces the ability of technology shocks to account for aggregate fluctuations by between 30% to 60%.     

Valuation effects of rollout publicly traded partnerships in the oil and gas industry

In trying to explain the often painful process of corporate restructuring, fingers are frequently pointed at inefficient management. This gives short shrift, however, to an important result of breaking up large, integrated corporations and selling them in smaller pieces: it makes the capital market more nearly complete, and there are strong theoretical arguments that this enhances value. We report the results of a natural experiment that occurred in the oil and gas industry, in which eleven integrated corporations formed publicly traded partnerships to hold their domestic production properties, yet (with few exceptions) retained most of the partnership units under corporate ownership. This behavior avoids any significant change in corporate governance, and is inconsistent with the tax motive popularly attributed as the reason for forming these partnerships; yet we find that significant positive abnormal returns accrued to stockholders when the formations were announced. The results we observe, therefore, support the theory that additional value can be realized by expanding the set of opportunities available to the investment community.     

The financial health of voluntary hospitals in interwar Britain

This article re–evaluates the gravity of the financial problems facing British voluntary hospitals in the interwar period. A relational database of statistics on hospital provision, finance (at both current and constant prices), and activity is used to derive consistent sets of hospitals for reporting purposes. The article presents novel analyses of the extent and pattern of hospital surpluses and deficits; of the capital accounts of selected individual hospitals; of trends in hospital expenditure; of the diversification of hospital income, emphasizing the declining importance of traditional philanthropy; and of the effect of these changes on hospital provision and utilization.     

Simulation-based costing for early phase life cycle cost analysis: Example application to an environmental remediation project

Simulation-based costing (SBC) has been slow to be adopted by the traditional cost estimating community. This can be attributed to many factors, including complexity, how to gather data and develop probabilistic inputs, cost of SBC software, and a lack of understanding of the benefits of developing cost versus risk profiles. This article presents an overview of how SBC can be effectively utilized for early phase life cycle cost (LCC) estimation. A formal process for conducting LCC incorporating SBC is presented not only to provide a structured approach but to also convey to stakeholders how such a study is conducted. This article also presents a case study where total ownership cost versus risk profiles were developed using this proposed process in order to support budgetary and planning considerations for a large environmental remediation project. This research argues that SBC is needed during the concept exploration phase because this is when budgets are often fixed and expectations set.