THE AGEING POPULATION: CRUNCH TIME FOR GOVERNMENT REFORMS

Current discussions about reforms to health and long‐term care miss the most important trends that should be influencing debate. With an ageing population that includes a higher proportion of people with manageable illnesses, health and care costs will rise. Reforms must ensure that existing government spending is used more efficiently and that it harnesses – rather than works against – private financing.     

Valuation of firms that disclose related party transactions

We examine the stock market’s valuation of firms that disclose related party (RP) transactions compared to those that do not. We examine market values just prior to the Sarbanes-Oxley Act (SOX) ban on RP loans to evaluate the market’s perception of firms with RP transactions prior to regulatory intervention. We also evaluate subsequent returns to assess the RP firms’ overall risk return profile. We use the 2001 S&P 1500 to provide a large yet manageable hand-collected sample that predates SOX. Our market analysis suggests that RP firms have significantly lower valuations and marginally lower subsequent returns than non-RP firms. Market perceptions differ based on partitioning firms by RP transaction type and parties. The results are consistent with the market discounting firms that engage in simple RP transactions.     

The assessment: knowledge, skills, and competitiveness

The autumn 1988 issue of the Oxford Review of Economic Policyconsidered the UK's deficiencies in vocational education andtraining (VET). It was there that Finegold and Soskice firstpopularized the notion of the 'low skills/low quality' equilibrium.This Assessment introduces a range of articles which discussdevelopments in the decade that has passed since then. It arguesthat, despite massive policy initiatives, there has been onlylimited improvement in the UK's relative VET performance. Considerableprogress has been made in analysis of market failures affectingthe supply of skills, and in analysis of the possible causesand consequences of low employer demand for skills (systemsfailure). The recent Competitiveness White Paper reflects thisimproved understanding. However, there is still an imperfectappreciation of the nature of skills and of their contributionto the development of a more competitive, higher value-addedeconomy. The article ends by suggesting how progress might bemade on this front.