Financial distress and the business cycle

In this paper we argue that firms' financial distress shouldplay a greater role in the macroeconomic analysis of the businesscycle. We provide a non-technical account of a general equilibriummodel that exhibits financially-driven equilibrium cycles. Weshow that the empirical evidence is widely supportive of thekey hypothesis and implications of our approach. We use themodel in order to evaluate the effects of several policy measures.It turns out that deepening the market for second-hand capitalgoods, subsidizing the interest payments of companies whichstart up when financial conditions are tight, and bailing outsome companies in default can indeed 'stabilize' the economy.By way of generalization, we may say that the policy reactionto a financially driven bust should be accommodating.     

Disclosure, leaks, and slips: Issues and strategies for prohibiting employee communication

Both popular and social science literature are replete with recommendations for enhancing communication effectiveness, typically defined as improving the clarity and impact of the spoken and written word. However, managing internal organizational processes and external market competitiveness often requires a different communication strategy, specifically silence and non-disclosure, while adhering to statutory regulations. This article summarizes the rationale for communication prohibitions, highlights counter forces mitigating their intended effects, and offers recommendations for successful implementation. The three major counter forces are: employee motivation and perception, changing socio-cultural norms, and organizational structures reflecting virtual teams and project teams. The eight recommendations for combating these forces are subsumed under one of two categories: creating an organizational culture supporting prohibitions, and executing the prohibitions with a minimum of employee resistance. In summary, employees charged with maintaining secrecy and adhering to non-disclosure prohibitions must view those restrictions as reasonable, warranted, equitable, and legal.     

Explaining the variance of price-dividend ratios

I report a bound on the variance of the-dividend ratios anda decomposition of their variance into terms that reflect changesin dividend growth and discount rates. The specification isnot restrictive. The test statistics do not require constructionof ex post present values; instead, they are restrictions onmeans, variances and covariances of price-dividend ratios, dividendgrowth, and discount rates. I consider implications for themean price-dividend ratio, and I evaluate whether a low meandiscount rate can rationalize the mean and variance of price-dividendratios. The results do not indicate any striking rejectionsof present value models. However, the bulk of the variance ofprice-dividend ratios must be accounted for by changing forecastsof discount rates, and discount rates must possess some unusualcharacteristics.     

Economic impact of hypoglycemia among insulin-treated patients with diabetes

Objective: The objective of this study was to assess the cost of hypoglycemic events among insulin-treated patients with diabetes and the potential cost savings to a hypothetical US health plan and employer of reducing hypoglycemic events with a device intervention.

Methods: A cost-calculator model was developed to estimate the direct costs of hypoglycemic events, accounting for diabetes type, age, and event severity. Model inputs were derived from published incidence rates of hypoglycemic events and direct medical costs. Assumed intervention efficacy was based on published studies of an emerging technology which yielded 72.2% (LGS Trial; ACTRN12610000024044) and 31.8% (ASPIRE Trial; NCT01497938) reductions in severe and non-severe hypoglycemic events, respectively. Model outcomes—including the number of severe (requiring medical assistance) and non-severe events, and direct/indirect medical costs (excluding intervention costs)—were evaluated over a 1-year period for a hypothetical health plan and employer perspectives.

Results: In a health plan with 10 million enrollees, patients without the intervention would have experienced 0.09 and 14.60 severe and non-severe hypoglycemic events per patient per year (PPPY), respectively (vs 0.02 severe and 9.96 non-severe events with the intervention). This translated into total direct medical cost savings of $45 million ($177 PPPY) for the health plan. For an employer with 100,000 employees, the intervention would have yielded additional savings of $492 PPPY in indirect costs.

Conclusion: Insulin-treated patients experience hypoglycemic events, which are associated with substantial direct and indirect medical costs. The cost savings of reducing hypoglycemic events need to be weighed against the costs of using diabetes device interventions.     

Organizational Politics:Tactics, Channels, andHierarchical Roles

This research examines the relationships among the types of self-serving political messages sent in organizations, the channels through which they are sent, and the targets to whom they are sent. Two theoretical streams converge in this study: Communication as Political Behavior and Media Usage Theory. A review and synthesis of these two bodies of literature yielded three hypotheses, each of which received strong statistical support. The data suggest that the process of encoding and transmitting self-serving messages is strongly related to the specific target to whom they are sent (boss, subordinate, or peer) and the channel through which they are sent (face-to-face, telephone, memo, or e-mail).