The impact of switching costs on the decision to retain or replace IT outsourcing vendors

While the IT outsourcing market is growing, outsourcing vendors are being replaced more frequently by firms. Since replacing vendors can affect the stability and quality of the IT services a firm receives, it is important to understand the drivers behind the decision to replace/retain vendors. This paper examines the impact of switching costs on this decision. We classify the various examples of switching costs into three categories (relational, financial and procedural) and develop a model to explain their role in the decision to replace or retain a vendor. The model also includes possible moderators of the relationship between switching costs and the vendor replacement decision. This model will be evaluated through a series of case studies of firms who have made this decision, and the refined model will be tested with a survey of IT outsourcing managers.

The direct costs of raising external equity capital for US REIT IPOs

Purpose – The purpose of this paper is to investigate the total direct costs of raising external equity capital for US real estate investment trust (REIT) initial public offerings (IPOs).

Design/methodology/approach – The study provides recent evidence on total direct costs for a comprehensive dataset of 125 US REIT IPOs from 1996 until June 2010. A multivariate OLS regression is performed to determine significant factors influencing the level of total direct costs and also underwriting fees and non-underwriting direct expenses.

Findings – The study finds economies of scale in total direct costs, underwriting fees and non-underwriting expenses. The equally (value) weighted average total direct costs are 8.33 percent (7.52 percent), consisting of 6.49 percent (6.30 percent) underwriting fees and 1.87 percent (1.22 percent) non-underwriting direct expenses. The study finds a declining trend of total direct costs for post 2000 IPOs which is attributed to the declining trend in both underwriting fees and non-underwriting direct expenses. Offer size is a critical determinant for both total direct costs and their individual components and inversely affects these costs. The total direct costs are found significantly higher for equity REITs than for mortgage REITs and are also significantly higher for offers listed in New York Stock Exchange (NYSE). Underwriting fees appear to be negatively influenced by the offer price, the number of representative underwriters involved in the issue, industry return volatility and the number of potential specific risk factors but positively influenced by prior quarter industry dividend yield and ownership limit identified in the prospectus. After controlling for time trend, the paper finds REIT IPOs incur higher non-underwriting direct expenses in response to higher industry return volatility prior to the offer.

Originality/value – This paper adds to the international REIT IPO literature by exploring a number of new influencing factors behind total direct costs, underwriting fees and non-underwriting direct expenses. The study includes data during the recent GFC period.

Health care and lost productivity costs of overweight and obesity in New Zealand

Objective: To estimate the costs of health care and lost productivity attributable to overweight and obesity in New Zealand (NZ) in 2006.

Methods: A prevalence-based approach to costing was used in which costs were calculated for all cases of disease in the year 2006. Population attributable fractions (PAFs) were calculated based on the relative risks obtained from large cohort studies and the prevalence of overweight and obesity. For each disease, the PAF was multiplied by the total health care cost. The costs of lost productivity associated with premature mortality were estimated using both the Human Capital approach (HCA) and Friction Cost approach (FCA).

Results: Health care costs attributable to overweight and obesity were estimated to be NZ$686m or 4.5% of New Zealand's total health care expenditure in 2006. The costs of lost productivity using the FCA were estimated to be NZ$98m and NZ$225m using the HCA. The combined costs of health care and lost productivity using the FCA were $784m and $911m using the HCA.

Conclusion: The cost burden of overweight and obesity in NZ is considerable.

Implications: Policies and interventions are urgently needed to reduce the prevalence of obesity thereby decreasing these substantial costs.

Judicial valuation of the social costs of crime

The true economic functions of the criminal courts are, first, to deter potential prospective offenders from committing offences, and in so doing reduce the total social costs of crime in the future; and secondly, to force the convicted offender to bear some of the costs, which the crime has externalised onto the victim(s) and wider society through retributive justice. These objectives are achieved through the sentencing function. Critics have lamented that too many extraneous factors are taken into account when setting penalties but the authors argue in this article that nevertheless these sentences are optimal because of the judges' comparative advantage. What is of great interest, and the focus of this article, are the implicit valuations of the social costs of crime that these sentences imply. Using the South Australia higher criminal courts as a case study, the authors estimate and utilise these judicial valuations to suggest a methodology for measuring the true economic value of the criminal courts. The analysis helps put into perspective the courts' very valuable contribution to social welfare.

Grid transaction management and an efficient development kit

Grid transaction management aims at guaranteeing the system consistency in face of various failures in Grid environments. In this paper, we propose a Grid transaction service (GridTS) and design coordination mechanisms for atomic, long-lived and real-time Grid transactions respectively, based on the features of Grid environments. GridTS has the following three advantages. Firstly, it separates the transaction management unit with transaction coordination algorithms so that it can coordinate the above three categories of transactions in a uniform way. Secondly, GridTS can dynamically generate compensating transactions during the long-lived transaction processing. Finally, it provides the programming interfaces similar to traditional distributed transactions. Moreover, we implement a Grid transaction development kit (GridTDK) for application programmers based on our GridTS. We evaluate the feasibility and effectiveness of GridTS by developing an application system using our GridTDK. ©2012 CRL Publishing Ltd.

ShopSmart 4 Health - protocol of a skills-based randomised controlled trial promoting fruit and vegetable consumption among socioeconomically disadvantaged women

Background
There is a need for evidence on the most effective and cost-effective approaches for promoting healthy eating among groups that do not meet dietary recommendations for good health, such as those with low incomes or experiencing socioeconomic disadvantage. This paper describes the ShopSmart 4 Health study, a randomised controlled trial conducted by Deakin University, Coles Supermarkets and the Heart Foundation, to investigate the effectiveness and cost-effectiveness of a skill-building intervention for promoting increased purchasing and consumption of fruits and vegetables amongst women of low socioeconomic position (SEP).

Methods/design
ShopSmart 4 Health employed a randomised controlled trial design. Women aged 18–60 years, holding a Coles store loyalty card, who shopped at Coles stores within socioeconomically disadvantaged neighbourhoods and met low-income eligibility criteria were invited to participate. Consenting women completed a baseline survey assessing food shopping and eating habits and food-related behaviours and attitudes. On receipt of their completed survey, women were randomised to either a skill-building intervention or a wait-list control condition. Intervention effects will be evaluated via self-completion surveys and using supermarket transaction sales data, collected at pre- and post-intervention and 6-month follow-up. An economic evaluation from a societal perspective using a cost-consequences approach will compare the costs and outcomes between intervention and control groups. Process evaluation will be undertaken to identify perceived value and effects of intervention components.

Discussion
This study will provide data to address the currently limited evidence base regarding the effectiveness and cost-effectiveness of skill-building intervention strategies aimed at increasing fruit and vegetable consumption among socioeconomically disadvantaged women, a target group at high risk of poor diets.

Costs and benefits of mandatory auditing of for-profit private and not-for-profit companies in Australia

This paper addresses the paucity of research surrounding the mandatory auditing of for-profit private and not-for-profit companies in Australia. We document the various mandatory auditing provisions under the Corporations Act and identify over 22 000 companies that lodge audited accounts with the regulator under federal law. In 2011, 6339 large proprietary companies, 186 small proprietary companies, 2797 foreign-owned companies, 3985 unlisted public companies and 8404 public companies limited by guarantee had an obligation under the Corporations Act to lodge audited accounts. While large proprietary and foreign-owned companies have an option to apply to the Australian Securities and Investment Commission for audit relief, we estimate that less than 10% are granted audit exemption. We document that since 1995 an additional 1500 large proprietary companies that should have lodged under the size provisions of the Corporations Act have been granted exemption from doing so (i.e., grandfathered), although these firms appear to be subject to an annual audit even though they do not lodge accounts. We estimate the costs and discuss the potential public interest and firm-level benefits associated with the mandatory auditing of for-profit private and not-for-profit companies in Australia.