BANKRUPTCY DISCRIMINATION WITH REAL VARIABLES

This paper reconsiders the accepted usage of nondeflated financial ratios in statistical models to differentiate between failed and nonfailed firms. Non-deflated ratios are hypothesized to inadequately reflect inter-temporal macroeconomic fluctuations that affect the ability of firm's to survive. Using a sample of 124 oil and gas companies between the period 1982–1988, the going concern assumption is evaluated with statistical logit models using either nondeflated or deflated financial ratios. Deflated company ratios are created by transforming data with price indices or by creating market value ratios. Empirical results suggest that a superior bankruptcy early warning model is developed for the oil and gas industry by creating real financial and reserve ratios and by introducing external factors, such as oil prices, interest rates and accounting method, as independent predictors. Overall classification accuracy is approximately 95 percent.     

COACHING COSTS AS TULLOCK COSTS: A MODEL OF RISING COACHING SALARIES

Escalating sports coaching costs have strained budgets at many universities. This paper analyses these expenditures as a form of Tullock Costs ( Tullock, 1967 ). In this framework the money the universities receive is spent on recruiting top talent, so the schools receive little, or no, monetary gain under current scholarship rules.     

Chinese foreign direct investment in the United States: Location choice determinants and strategic implications for the State of Indiana

Identifying the unique U.S. state-level factors that more often give rise to Chinese firm-led investment is the central focus of this article. Looking at Chinese investment in the United States between 2007 and 2011, this article (1) explores the determinants underlying the locational choices of Chinese firms, (2) seeks to understand why some U.S. states receive relatively greater amounts of investment from China, (3) assesses whether prior trends are likely to continue into the future; and—perhaps most importantly—(4) seeks to identify what (if anything) the state of Indiana can do to better position itself to capture greater amounts of Chinese investment moving forward. We recommend the following actions for the state of Indiana: (1) firm targeting—Indiana is a prime FDI target for private, firm-led, greenfield investment; (2) differentiation— Indiana has distinct advantages over other locations in the Midwest; (3) promotions—trade missions and overseas office locations are investments, not costs; (4) investments in relationships—cultural sensitivity and friendship make the difference.     

A RESEARCH AGENDA FOR STRATEGIC MANAGEMENT IN THE 1990s

The importance of thinking strategically is often glossed over when academics try to apply this concept to themselves. This frequently results in research or articles that are not very insightful or useful either to other academics or to practising managers. To overcome this problem and to explore the future needs of the field of strategic management, this article proposes topics for a research agenda for strategic management in the 1990s that is based on the forecast of ‘experts’ in the field.     

Authors’ Reply: Forecasting Social Security Actuarial Assumptions - Discussion by John A. Beekman; Cecil J. Nesbitt; Krzysztof M. Ostaszewski; Gregory Savord; Richard S. Foster,October 1997

Abstract

This study provides an economic analysis of life insurance company expenses and develops a methodology for the construction of benchmark expense factors. These benchmarks can facilitate the pricing of new business, cost control within companies, and expense comparisons among companies. We derive the expense factors by estimating a cost function wherein total general expenses are modeled as a function of input prices and physical outputs, and the physical outputs are proxies for the cost drivers of the different lines of business. This methodology has two important advantages: first, the derived expense factors are independent of the methods that insurers use in allocating total expenses across lines of business. Second, the estimated cost function explicitly accounts for different degrees of economies of scale and consequently in the present value of marginal expenses across insurers. Hence, this study demonstrates that economies of scale and, in turn, size must be considered when constructing an expense table.     

The Development of Accountancy Links in the Commonwealth

This paper has been produced as part of a larger study financed by the Social Science Research Council on the nature and significance of professional links in the Commonwealth.     

Labor Market Discrimination Against Men with Disabilities in the Year of the ADA

The Americans with Disabilities Act (ADA) provides civil rights protections to persons with disabilities, but the debate that preceded passage of the Act was not based on empirical estimates that could be used to measure its performance. This article estimates the extent of wage discrimination against men with disabilities in 1990, providing a reference that can be used to evaluate the impact of the ADA. The results show large productivity-standardized wage differentials between disabled and nondisabled men that are weakly correlated with the strength of prejudice against different impairments. Physical limitations explain part, but not all, of the wage differentials. The results also show that low employment rates are a more serious problem than wage discrimination for workers with disabilities.     

Impact of Acquisitions on Thrift Performance

This study focuses on the risk and return performance of savings and loans that were active acquirers during the early and mid-eighties relative to that of non-acquirers. Acquirers took on more risks than nonacquirers, but were less profitable. Separating acquirers by the health of their acquisitions, acquirers of both healthy and troubled associations or of troubled associations only were more highly leveraged and saw their profitability erode over the post-acquisition period. These results suggest that the problems of integration are compounded when there are multiple acquisitions over a relatively short period of time and when the acquired association is unhealthy.