Establishing a Framework for an Information System

Many decision errors arise out of a failure to understand the nature and structure of the information system that supports policy decisions, public or private. For a information system to be reliable and accurate three subsystems, data collection, inquiry (or analysis) and policy decision, must share the same base of concepts, measurable proxies porn the real world to represent those concepts, and compatible measurement techniques and processing designs in the data used. All information systems must be closely adapted to the specific context of the decisions they are intended to support.
Rapid globalization of markets and the parallel revolution in information technologies and supporting information infrastructure, institutions and human capital are transforming the agri-food sector. The food system is moving away from mass markets driven by the production of standardized commodities toward many smaller, diverse, and customized niche markets driven by consumer preferences for specific food characteristics. Concentration, vertical coordination and integration are growing, particularly in the livestock sector, and especially hogs. Information technologies now permit firms to discover and track consumer preferences while the new biotechnologies make it possible to create the characteristics in products that consumers desire in niche markets. Information has itself become an important commodity.     

Credit constraints and productivity in Peruvian agriculture

This article evaluates the performance of a rural credit market in Peru. We develop a model that shows that collateral requirements imposed by lenders in response to asymmetric information can lead not just to quantity rationing but also to transaction cost rationing and risk rationing. Just like quantity rationing, these two additional forms of nonprice rationing adversely affect farm resource allocation and productivity. We test the insights of the model using a panel data set from Northern Peru. We estimate the returns to productive endowments for constrained and unconstrained households using a switching regression model. We find that, consistent with the theory, productivity is independent of endowments for unconstrained households but is tightly linked to endowments for constrained households. We estimate that credit constraints lower the value of agricultural output in the study region by 26%.     

Regime switching and oligopsony power: the case of U.S. beef processing

In this article, we estimate a model of oligopsony behavior under imperfect monitoring of rival actions to analyze weekly marketing margin data for the U.S. beef packing industry. Oligopsonists are hypothesized to follow a discontinuous pricing strategy in equilibrium, and we focus on shocks in the normal throughput of supply as a potential catalyst for regime switching between cooperative and noncooperative phases. We adopt an algorithm developed by Bellone (2005) that relies on Hamilton’s (1989) multivariate first‐order Markov process to test for the cooperative/noncooperative switching behavior. We find strong evidence that links switching conduct by packers to disruptions in coordinating the derived demands for processed beef with the supply of live cattle. Once switched, cooperative regimes lasted an average of 21 weeks, while noncooperative regimes averaged 33 weeks. The average marketing margin for processed beef was 68% lower in the noncooperative regimes compared to the cooperative regimes. This led to an annual average increase in profits of 408 million dollars to the beef packing industry and about an 8–9% reduction in live cattle prices.     

A Synthesis of Equity Valuation Techniques and the Terminal Value Calculation for the Dividend Discount Model

This paper lays out alternative equity valuation models that involve forecasting for finite periods and shows how they are related to each other. It contrasts dividend discounting models, discounted cash flow models, and residual income models based on accrual accounting. It shows that some models that are apparently different yield the same valuation. It gives the general form of the terminal value calculation in these models and shows how this calculation serves to correct errors in the model. It also shows that all models can be interpreted as providing a particular specification of the terminal value for the dividend discount model. In so doing it shows how one calculates the terminal value for the dividend discount formula. The calculation involves weighting forecasted stocks and flows of value with weights determined by a parameter that can be discovered from pro forma analysis.     

The effect of non-audit services on client risk, acceptance and staffing decisions

The Sarbanes Oxley Act of 2002 prohibited auditing firms from providing certain non-audit services to audit clients and left open the possibility that other currently non-prohibited services could also be banned. This prohibition hinges, in part, on regulatory concerns that auditors were willing to accept prospective higher risk clients in order to obtain more profitable non-audit service engagements. Accounting firms rejected this claim. Given the prospect that more non-audit services could be prohibited, we revisit this debate by examining these competing claims in an experiment in which we manipulate risk and the potential to sell non-audit services and then observe the impact of these variables on auditors’ client acceptance and subsequent staffing decisions. Specifically, audit partners received client information and were asked to make an acceptance decision and propose a staffing plan for a potential engagement. We find that a higher (lower) level of risk decreased (increased) the likelihood of acceptance and this relation did not vary with the potential to provide non-audit services. These results do not support the regulators’ claims but are consistent with the firms’ claims. Further, we found that more experienced auditors were assigned to the prospective client whose management had lower integrity. This staffing plan is consistent with a risk adaptation strategy for the client with lower integrity. The prohibition of certain non-audit services has been justified on the grounds that auditors might engage in systematic opportunistic behavior. However, our results do not find such behavior which should inform the current PCAOB deliberation over whether additional services should be banned. Alternatively, different justification must be found for the prohibitions.     

The effects of computerized performance monitoring: An ethical perspective

Considerable controversy has surrounded the use of computerized performance monitoring (CPM) by employers. Critics of this technology contend that CPM usage raises serious ethical concerns. Beliefs that the use of computerized performance monitors results in unfair performance evaluation, stress and health problems underlie much of the current concern over this technology. A field study was undertaken to provide empirical evidence that could be used to guide the design and use of computerized performance monitors to minimize these problems. One hundred forty three members of the Communication Workers of America participated in a cross sectional field study. The study examined the relationship between various monitoring system characteristics and employees' health problems, stress and satisfaction with the performance evaluation process. The ethical implications of the results are discussed.Stephen R. Hawk is Associate Professor of Information Systems at the University of Wisconsin-Parkside's School of Business. His research interests include decision support systems, computerized performance monitoring and information system implementation. His articles have appeared inDecision Sciences, IEEE Transactions on Engineering Management, andInternational Journal of Man-Machine Studies.     

Transport Policy and Transport Tax Reform

We are now entering a new phase of transport policy fiscal instruments. Rather than reforming existing measures, the UK and several other countries are moving towards replacing the whole transport taxation regime. This article reviews the ways that car taxation is used internationally to promote fuel economy, cleaner fuels and reduce traffic growth. Fiscal measures to manage traffic growth in the UK have faced political difficulties and, since 2000, have given way to a somewhat random set of policy decisions, together with a shift in focus towards the dominant issue of congestion reduction. An eventual replacement of existing car taxation measures with a new national road user charging regime is now contemplated, but there is a danger that the confusion in purpose that now characterizes transport taxation policy could be carried over to the new regime.