Usefulness of financial ratios in a single industry

This paper reports the findings of a study on the relationship and ratio grouping of a well-published set of financial ratios within the context of a single, homogenous industry. The findings provide some insight into the validity of using single-industry ratio averages as standards to evaluate individual firm performance. Factor analysis was used to study the interrelationship among the ratios and to determine whether these ratios group in the “traditional” category of ratios suggested in the financial statement analysis literature. This analysis was followed by a cluster analysis of the composite ratios derived from the factor analysis to determine whether any consistent and stable statistical grouping of firms developed over time within the industry. These analyses were done for 72 companies for the period 1966–1975 using Dunn and Bradstreet ratios and Compustat data.     

Total quality management and human resource systems: an international comparison

This paper takes advantage of a unique international data set to examine the determinants of the adoption and sustainability of total quality management techniques, focusing in particular on the role played by human resource professionals and practices. The data come from a 1991 survey conducted by Ernst and Young and the American Quality Foundation covering the use of TQM tools in the computer, auto, health care and banking industries in Japan, the United States, Canada and Germany.

The research distinguishes between two ways of implementing total quality management – one approach conceptualizes TQM as a relatively limited set of technical engineering changes while the second implements these technical changes as part of a larger transformation of the organization of work. We find support for the second approach in that the number of employees using quality tools and the number of quality tools in use is greater and lasts longer in firms that also have team-based human resource systems for frontline employees, with team structures, suggestion systems, meetings and group rewards. This central finding holds across all countries and industries studied.

We also find that achievement of these changes requires the commitment of organizational stakeholders to incorporate the interests of employees in strategic decision making. Though union presence alone does not predict the adoption or sustainability of these innovations, partnership between management and union does have a positive effect. The level of strategic influence of the human resource department also influences innovation, though in ways that differ across countries and industries.

The findings suggest the value of comparative studies and of research focused at exploring sub-national variation. The findings also suggest the value of a longitudinal study of the sustainability of innovation.     

Is the doctor in? A relational approach to job design and the coordination of work

When designing jobs, the degree of specialization is a key consideration. Though functional specialization allows workers to develop deep areas of expertise, it also increases the challenge of coordinating their work. In this article, we propose the concepts of stage‐ and site‐based specialization and posit that together they can counteract the divisive effects of functional specialization. Taking advantage of a natural experiment in physician job design at a Massachusetts hospital, we explore the impact of stage‐ and site‐based specialization on coordination and performance outcomes. Building on recent interest in relational approaches to job design, this study is the first to link relational job design to relational outcomes such as coordination. Our findings have practical implications for job design in professional service settings such as education, consulting, and health care. © 2008 Wiley Periodicals, Inc.     

SPECIAL‐INTEREST SPILLOVERS AND TOBACCO TAXATION

This study explores the effects tobacco special interest has had on cigarette tax rates. Using a spatial econometric model to control for tax competition and the endogeneity present in state tax rates, this study finds that tobacco special interest has played a significant role in influencing state cigarette tax rates. Pounds of tobacco grown in a state and tobacco industry campaign contributions are associated with lower cigarette tax rates. The empirical results show that the magnitude of the special‐interest effect can be two to five times as large when the spatial spillover effects are included. (JEL C23, H71, H73)     

The United States International Air Route Award Process: Shareholder Wealth Effects and Policy Implications

This study empirically investigates the market pricing dynamics of United States airline stocks in response to United States government allocations of exclusive, zero-priced international air route awards from the 1963 to 1993 time period. A $900 filing fee required by the Department of Transportation represents the only explicit monetary cost associated with the award of an international air route. This low fee suggests that the current award system subsidizes United States airlines by transferring valuable public property rights to private ownership and control for paltry explicit fees. The performed dollar abnormal tests suggest that the 82 analyzed international air routes have enriched airline shareholders by about $3.5 billion.     

Economic news as a consumer product: An analysis of the effects of alternative media sources on the formation of consumer economic expectations

This study reports the results of a behavioral experiment in which 120 subjects were exposed to different media reports of the same monthly Bureau of Labor Statistics' unemployment reports. After reading the news stories, as reported by the CBS Evening News, The Wall Street Journal, and the Washington Post, the subjects were asked similar questions to those used in the University of Michigan's Survey on Consumer Sentiments. The results of the study suggest that consumer confidence may be sensitive to the selection of media source.

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Zusammenfassung Der Beitrag berichtet über eine Untersuchung individueller Unterschiede bei wirtschaftlichen Erwartungen, die nicht durch unterschiedliche wirtschaftliche Nachrichten, sondern — bei gleichlautenden Nachrichten — durch unterschiedliche Medien, über die sie vermittelt werden, hervorgerufen werden.Die Nachrichten entstammten den monatlichen Arbeitslosenberichten der amtlichen Beschäftigungsstatistik. Insgesamt 36 Nachrichtentexte der CBS Evening News, des Wall Street Journal und der Washington Post wurden für die Untersuchung so überarbeitet, daß die konkrete Quelle und der tatsächliche Zeitraum, auf den sich die Nachricht jeweils bezog, nicht mehr erkannt werden konnte. Die so bereinigten Nachrichten wurden 120 Versuchspersonen (Studenten) zum Lesen vorgelegt. Anschließend wurden ihnen Fragen zur Erhebung wirtschaftlicher Erwartungen vorgelegt.Die Ergebnisse machen deutlich, daß Unterschiede im Vertrauen auf die zukünftige wirtschaftliche Entwicklung bei gleichen inhaltlichen Nachrichten auf Unterschiede in den Nachrichtenmedien zurückgeführt werden können. Personen, die sich mehr auf Zeitungsinformationen stützten, kamen im Vergleich zu solchen, die sich eher auf das Fernsehen stützten, zu signifikant höheren Werten auf der Vertrauensskala. Dieses Ergebnis dürfte allerdings insofern verzerrt sein, als die bildliche Komponente einer Nachricht in der Untersuchung nicht berücksichtigt wurde.

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Stephen W. Pruitt is Assistant Professor in the Graduate School of Business, Indiana University, Bloomington, IN 47405, USA. George E. Hoffer is Professor in the Department of Economics, School of Business, Virginia Commonwealth University, Box 4000, Richmond, VA 23284-4000, USA.The authors are grateful to the Faculty Grant-In-Aid Program at Virginia Commonwealth University for funding.