Data Fixation and the Use of Traditional Versus Activity-Based Costing Systems

An important debate in the contemporary accounting literature relates to the relative merits of activity-based versus volume-based product costing methodologies. Traditional volume-based costing systems are said to be flawed and may seriously mislead strategic decision making. Such arguments assume that decision makers use such information in an unproblematic way. This article reports on an experiment designed to investigate whether decision makers are able to overcome data fixation in a setting involving the use of product cost information. In response to criticisms of previous accounting studies of data fixation, subjects received some feedback after each decision, and were rewarded based on performance. The experiment involved subjects making a series of production output decisions based on detailed case information of a hypothetical firm facing different market conditions for each decision. A between-subjects design was utilized with two cost system treatments: activity-based costing (ABC) and traditional costing (TC). It was hypothesized that the group provided with ABC cost data would make 'optimal' decisions and the group provided with TC cost data would overcome fixation. The results of the experiment indicated that there was, in general, evidence of data fixation among TC subjects, but a small number of subjects did adjust to ABC costs. These results are discussed in the light of previous research and some future directions are outlined.     

Rates of Return to Schooling in China

This study uses data from a 1988 survey of Chinese individuals to estimate rates of return to schooling in China. The Mincer-type rate of return to schooling was estimated at 4.02 percent in the rural areas and 3.29 percent in the urban areas; these are fairly low estimates compared with similar estimates in other countries. The rate of return to schooling for females was significantly higher than that for males in urban areas. In addition, members of the Communist Party in urban areas had significantly lower returns to schooling compared with non-members.     

Why managers divest—Evidence from New Zealand's largest companies

Chief Executives from New Zealand's largest companies were surveyed to distinguish divesting and nondivesting companies, and to identify the relative importance of the factors and motives which led to the divestment of 208 business units in the period 1985 through 1990. The divesting companies were considerably larger and faster growing than nondivestors. The typical divestment was motivated by the need to convert unattractive assets into liquid form which could then be held to strengthen the balance sheet, or reinvested in either the core business or new areas.     

Likelihood-based specification analysis of continuous-time models of the short-term interest rate

An extensive collection of continuous-time models of the short-term interest rate is evaluated over data sets that have appeared previously in the literature. The analysis, which uses the simulated maximum likelihood procedure proposed by Durham and Gallant (2002), provides new insights regarding several previously unresolved questions. For single factor models, I find that the volatility, not the drift, is the critical component in model specification. Allowing for additional flexibility beyond a constant term in the drift provides negligible benefit. While constant drift would appear to imply that the short rate is nonstationary, in fact, stationarity is volatility-induced. The simple constant elasticity of volatility model fits weekly observations of the three-month Treasury bill rate remarkably well but is easily rejected when compared with more flexible volatility specifications over daily data. The methodology of Durham and Gallant can also be used to estimate stochastic volatility models. While adding the latent volatility component provides a large improvement in the likelihood for the physical process, it does little to improve bond-pricing performance.     

Environmental Kuznets Curve: Conclusive Econometric Evidence for CO2

This paper begins with a statistical formulation of the Environmental Kuznets Curve (EKC) and discusses the major econometric problems raised in the literature in testing this hypothesis using panel data. A simple t‐test is then presented that avoids these econometric problems. The result from applying the t‐test confirms conclusively the EKC for CO₂ as formulated.     

Comparative persistence and adherence with newer anti-hyperglycemic agents to treat patients with type 2 diabetes in the United States

Objectives: Non-adherence and non-persistence to anti-hyperglycemic agents are associated with worse clinical and economic outcomes in patients with type 2 diabetes. This study evaluated treatment persistence and adherence across newer anti-hyperglycemic agents (canagliflozin, dapagliflozin, sitagliptin, saxagliptin, linagliptin, liraglutide, or exenatide).

Methods: This retrospective cohort study of Truven Health Analytics Marketscan databases included adult patients with type 2 diabetes whose first pharmacy claim for a newer anti-hyperglycemic agent was between February 1, 2014 and July 31, 2014. Treatment persistence and adherence were assessed for 12 months after the first claim (post-index). Persistence was defined as no gap ≥90 days between the end of one pharmacy claim and the start of the next pharmacy claim post-index. Adherence used two definitions: proportion of days covered (PDC) and medication possession ratio (MPR). Multivariable analyses of non-persistence (hazard ratios) and adherence (odds ratios) were adjusted for baseline demographics, drug cost, clinical characteristics, and other anti-hyperglycemic agents.

Results: A total of 11,961 patients met all study selection criteria. Persistence rates at 12 months were significantly greater (p?p?=?0.83; PDC?=?0.79) and canagliflozin 300?mg (MPR?=?0.92; PDC?=?0.81) were greater than for the other index anti-hyperglycemic agents (MPR?=?0.33–0.75; PDC?=?0.33–0.72). Consistent results for treatment persistence and adherence were observed in multivariable analyses that were adjusted baseline characteristics.

Conclusions: Canagliflozin was associated with better treatment persistence and treatment adherence compared with other anti-hyperglycemic agents in real-world settings.     

An Economic Analysis of Requirements to Prevent Handheld Hair Dryer Water Immersion Electrocutions in the USA

Before 1987, when handheld hair dryers were not required to protect against water immersion electrocutions, there were almost 16 such electrocutions annually in the USA. This article presents a retrospective evaluation of the benefits and costs of the 1987 and 1991 immersion protection requirements of the voluntary hair dryer safety standard in the USA. The benefits are based on estimates of the reduced risk of electrocution resulting from the requirements, and the valuation of the reduced risk derived from willingness to pay studies of the “value of statistical life” found in the economics literature. The costs were defined as the incremental costs associated with incorporating the immersion protection technology into handheld hair dryers. The study found that the requirements were highly effective and may have reduced the immersion-related mortality rate by almost 97%. The expected present value of the estimated benefits of the requirements amounted to about $4.56 per dryer in 2014 dollars and substantially exceeded the costs of about $2 per dryer. The primary outcome measure, the expected net benefits (i.e., benefits minus costs) of the requirements, amounted to an average of about $2.56 per hair dryer, over the hair dryer’s expected product life. Given sales of about 23 million handheld hair dryers annually, the present value of the expected net benefits associated with 1 year’s production would have amounted to about $58.9 million. A sensitivity analysis showed that the major findings were robust with respect to changes in the underlying parameters of the analysis. The study also discusses the factors leading to a high rate of effectiveness estimated for the immersion protection requirements.     

Supply Chain Performance Based on the Lean–Agile Operations and Supplier–Firm Partnership: An Empirical Study on the Garment Industry in Indonesia

The purpose of this study is to explore how lean–agile operations and supplier–firm partnership can improve garment small and medium enterprise (SME) supply chain performance. This study is based on cross‐sectional survey research that provides longitudinal evidence to show how lean–agile operations and partnership strategy influence supply chain and garment SME performance. To clarify the relationships among these constructs, structural equation model (SEM) is conducted to examine the model fit and the five hypotheses. The result shows that agile supply chain and partnership strategy are critical for garment SMEs because these strategies influence their supply chain performance. However, the leanness strategy does not necessarily influence their supply chain performance. The supply chain performance and partnership strategy have a positive influence on the SME performance.     

Investment and the soft budget constraint in China

This paper examines the incentive effects of the soft budget constraint on the investment behavior of firms in general and on the investment-cash flow sensitivity in particular. To this end, we develop a simple model of moral hazard that takes the soft budget constraint into account. Within this moral hazard environment, we show that investment is positively related to the amount of internal funds. We further show that the presence of the soft budget constraint deteriorates the moral hazard problem, thereby making the investment level less sensitive to the amount of internal funds. This is the case irrespective of whether the soft budget constraint renders the firm more or less liquidity constrained. To test the model's empirical implications, we employ data of China's listed companies for the period from 1997 to 2003. We use the share of state ownership as a proxy for the severity of the soft budget constraint. We find strong evidence that firms with larger shares of state ownership exhibit lower investment-cash flow sensitivities than firms with smaller shares of state ownership.     

Note on a model of Chinese national income determination

A macroeconomic model of Chow (1985) explaining aggregate consumption by the permanent income hypothesis of Robert Hall and aggregate investment by the accelerations principle was found to fit Chinese annual data from 1952 to 1982 well. This note shows that the same model can successfully explain Chinese annual data from 1978 to 2006.