The reform of housing benefit

Housing benefit in the UK is currently out of control, due to its open-endedness and the ability of landlords to control rent levels. This paper proposes the abolition of housing benefit and its replacement with a notional housing element incorporated into income support. This will break the control of landlords as well as reconnecting the link between income and rent levels which is lost under the current system.     

RESPONSIBILITY AND CAPABILITY

This paper explores the issue of responsibility and links it to the concept of capability. The paper begins by looking at what it means to be responsible and connects this to the now common distinction in public policy between blame and task. It is argued that responsibility should be internalised rather than externalised and placed in the hands of the state. This can be done through the extension of property rights and so the paper offers a brief justification for the link between responsibility and property rights. The final part of the paper considers the ideas of capability and competence and uses these to argue for the placing of personal responsibility at the heart of public policy.     

Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand

This study examines the relation between stock prices and accounting earnings and book values in six Asian countries: Indonesia, South Korea, Malaysia, the Philippines, Taiwan, and Thailand. The analysis is based on a residual earnings model that expresses the value of the firm in terms of book value and residual income. The model holds for any clean surplus accounting system. However, for finite time horizons, biased accounting may affect model estimates. The six countries examined in this study differ in faithfulness to clean surplus accounting as well as bias (conservatism). The study addresses two questions. First, are there systematic differences across countries in the value relevance of accounting, and are these differences related to accounting differences? Second, are there systematic differences in the incremental and relative information content of book value per share (BVPS) and abnormal (residual) earnings per share (REPS) across the countries, and are such differences related to accounting differences? We find differences across the six countries in the explanatory power of BVPS and REPS for firm values. Explanatory power for Taiwan and Malaysia is relatively low while that for Korea and the Philippines is relatively high. These differences are generally consistent with differences in accounting practice; however, since Korean accounting practice is strongly influenced by tax law, we did not expect the high association for Korea. Second, with respect to the incremental and relative explanatory power of BVPS and REPS, we find BVPS to have high explanatory power in the Philippines and Korea but little in Taiwan. In all six countries REPS has less explanatory power than BVPS in most years. Again, the evidence may be interpreted as suggesting accounting practice affects valuation (with Korea again as the exception). Finally, we provide evidence on the sensitivity of the timing of comparisons of stock prices and accounting values. We find that comparing prices at year-end (even though annual accounting information has not been released at that time), in general, provides the highest correlation between market and accounting numbers.     

A point optimal test for heteroscedastic disturbances

A new test for additive heteroscedasticity in the disturbances of the linear regression model is proposed. Power functions of various forms of the new test are compared empirically with those of currently favoured tests for a range of heteroscedastic models. The results highlight the power advantage of a test which is MP1 at a central point in the alternative hypothesis parameter space. The main conclusion is that the recommended version of the new test is generally more powerful than existing tests against medium and severe heteroscedasticity, whereas the King and Szroeter tests perform better against weak heteroscedasticity.     

Hedge funds and financial stability: Regulating prime brokers will mitigate systemic risks

We review key characteristics of the hedge fund industry, and identify conditions under which this sector can pose a threat to financial stability. Direct regulation of hedge funds that increases transparency does not appear feasible, may create a moral-hazard problem, and may reduce market liquidity. Indirect regulation by prime brokers and market discipline by creditors, counterparties, and investors have been effective in limiting the risks from the hedge fund sector. To reduce systemic risks, more regulation of prime brokers is warranted to avoid competitive dynamics from undermining counterparty risk management practices.     

Issues in Growing a Family Business: A Strategic Human Resource Model

The conceptual literature on family businesses suggests that family businesses have difficulty managing their human resources, especially when it concerns a family member or the transition from the founder to the successor. The authors empirically examined the assumptions raised in the conceptual literature regarding whether family businesses were experiencing human resource problems in growing their business and what factors enabled or constrained the ability of their businesses to grow. The authors used in-depth interviewing to collect data in order to emphasize the depth of the issue. Using content analysis with subject matter experts coding the data, the authors sought to mine the richness of data. Finally, the authors analyzed the data using Elliot Jaques' Stratified Systems Theory as a model to examine the strategic human resource issues and to draw some tentative conclusions.