Profitability, uncertainty and multi-product firm product proliferation: The Spanish car industry

This article studies how product introduction decisions relate to profitability and uncertainty in the context of multi-product firms and product differentiation. These two features, common to many modern industries, have not received much attention in the literature as compared to the classical problem of firm entry, even if the determinants of firm and product entry are quite different. The theoretical predictions about the sign of the impact of uncertainty on product entry are not conclusive. Therefore, an econometric model relating firms’ product introduction decisions with profitability and profit uncertainty is proposed. Firm’s estimated profits are obtained from a structural model of product demand and supply, and uncertainty is proxied by profits’ variance. The empirical analysis is carried out using data on the Spanish car industry for the period 1990-2000. The results show a positive relationship between product introduction and profitability, and a negative one with respect to profit variability. Interestingly, the degree of uncertainty appears to be a driving force of entry stronger than profitability, suggesting that the product proliferation process in the Spanish car market may have been mainly a consequence of lower uncertainty rather than the result of having a more profitable market. Keywords: Product introduction, entry, uncertainty, multiproduct firms, automobile JEL codes: L11, L13

Vom Finanz- zum Wissenschaftsbetrug : Methode, den Irrungen in der medizinischen Literatur beizukommen [From financial to scientific fraud : Methods to detect discrepancies in the medical literature].

Fraud is as old as Mankind. There are an enormous number of historical documents which show the interaction between truth and untruth; therefore it is not really surprising that the prevalence of publication discrepancies is increasing. More surprising is that new cases especially in the medical field generate such a huge astonishment. In financial mathematics a statistical tool for detection of fraud is known which uses the knowledge of Newcomb and Benford regarding the distribution of natural numbers. This distribution is not equal and lower numbers are more likely to be detected compared to higher ones. In this investigation all numbers contained in the blinded abstracts of the 2009 annual meeting of the Swiss Society of Anesthesia and Resuscitation (SGAR) were recorded and analyzed regarding the distribution. A manipulated abstract was also included in the investigation. The χ(2)-test was used to determine statistical differences between expected and observed counts of numbers. There was also a faked abstract integrated in the investigation. A p<0.05 was considered significant. The distribution of the 1,800 numbers in the 77 submitted abstracts followed Benford's law. The manipulated abstract was detected by statistical means (difference in expected versus observed p<0.05). Statistics cannot prove whether the content is true or not but can give some serious hints to look into the details in such conspicuous material. These are the first results of a test for the distribution of numbers presented in medical research.

Financial impact of introducing the Swiss-DRG reimbursement system on potentially avoidable readmissions at a university hospital.

QUESTION UNDER STUDY: Thirty-day readmissions can be classified as potentially avoidable (PARs) or not avoidable (NARs) by following a specific algorithm (SQLape®). We wanted to assess the financial impact of the Swiss-DRG system, which regroups some readmissions occurring within 18 days after discharge within the initial hospital stay, on PARs at our hospital. METHODS: First, PARs were identified from all hospitalisations recorded in 2011 at our university hospital. Second, 2012 Swiss-DRG readmission rules were applied, regrouped readmissions (RR) were identified, and their financial impact computed. Third, RRs were classified as potentially avoidable (PARRs), not avoidable (NARRs), and others causes (OCRRs). Characteristics of PARR patients and stays were retrieved, and the financial impact of PARRS was computed. RESULTS: A total of 36,777 hospitalisations were recorded in 2011, of which 3,140 were considered as readmissions (8.5%): 1,470 PARs (46.8%) and 1,733 NARs (53.2%). The 2012 Swiss-DRG rules would have resulted in 910 RRs (2.5% of hospitalisations, 29% of readmissions): 395 PARRs (43% of RR), 181 NARRs (20%), and 334 OCRRs (37%). Loss in reimbursement would have amounted to CHF 3.157 million (0.6% of total reimbursement). As many as 95% of the 395 PARR patients lived at home. In total, 28% of PARRs occurred within 3 days after discharge, and 58% lasted less than 5 days; 79% of the patients were discharged home again. Loss in reimbursement would amount to CHF 1.771 million. CONCLUSION: PARs represent a sizeable number of 30-day readmissions, as do PARRs of 18-day RRs in the 2012 Swiss DRG system. They should be the focus of attention, as the PARRs represent an avoidable loss in reimbursement.

Framework for Corporate and Financial Governance for Regulatory Bodies under the aegis of the Department of Health and Children

The document should be read as supplementary to existing requirements as set out both in statute â?" particularly legislation specific to your organisation, the Health Acts 1947-2004, Ombudsman Act, 1980, Data Protection Acts 1988 & 2003, Freedom of Information Acts 1997-2003, Ethics in Public Office Acts 1995 & 2001, Ombudsman for Children Act, 2002 and the Comptroller and Auditor General (Amendment) Act, 1993 – and in Government approved guidelines, including the Code of Practice for the Governance of State Bodies (2001), Public Financial Procedures, The Role and Responsibilities of Accounting Officers (2003) and Risk Management Guidance for Government Departments and Offices (2004). Read the report (PDF, 1.4mb)  

Framework for Corporate and Financial Governance for Agencies funded by the Department of Health and Children

Corporate governance is the system by which organisations direct and control their functions and relate to their stakeholders in order to manage their business, achieve their mission and objectives and meet the necessary standards of accountability, integrity and propriety. It is a key element in improving efficiency and accountability as well as enhancing openness and transparency. A significant element of the Governmentâ?Ts programme for health service reform is the strengthening of governance and accountability arrangements across the health system. Read the Report (PDF, 1mb)

Health system responses to financial pressures in Ireland: policy options in an international context

Given the scale of the challenge facing the health system for 2013 and subsequent years, the Department of Health invited the European Observatory on Health Systems and Policies to prepare a report on the implications for the Irish health system of our current financial pressures. The Observatory is an international partnership hosted by the World Health Organisation (WHO). The partnership includes three other international agencies (European Commission, the European Investment Bank, World Bank), several national and decentralized governments, including Ireland, and academic institutions. As an independent and neutral knowledge broker the Observatory's core mission is to inform policy-making and decision-making processes by providing tailored, timely and reliable evidence on health policy and health systems. Click here to download PDF 2.1mb

Can Families Resist Managerial and Financial Revolutions? Swiss Family Firms in the Twentieth Century

The aim of this contribution is to highlight the long-term evolution of family capitalism in Switzerland during the twentieth century. We focus on 22 large companies of the machine, electrotechnical and metallurgy (MEM) sector whose boards of directors and general managers have been identified in five benchmark years across the twentieth century, which allows us to distinguish between family-owned and family-controlled firms. Our results show that family firms prevailed until the 1980s and thus contradict the dominance of 'managerial capitalism'. Although we observe a decline of family capitalism during the last decade of the century, the significant remaining presence of family firms in 2000 allows us to relativise the advent of investor capitalism.

Profitability, uncertainty and multi-product firm product proliferation: The Spanish car industry

This article studies how product introduction decisions relate to profitability and uncertainty in the context of multi-product firms and product differentiation. These two features, common to many modern industries, have not received much attention in the literature as compared to the classical problem of firm entry, even if the determinants of firm and product entry are quite different. The theoretical predictions about the sign of the impact of uncertainty on product entry are not conclusive. Therefore, an econometric model relating firms’ product introduction decisions with profitability and profit uncertainty is proposed. Firm’s estimated profits are obtained from a structural model of product demand and supply, and uncertainty is proxied by profits’ variance. The empirical analysis is carried out using data on the Spanish car industry for the period 1990-2000. The results show a positive relationship between product introduction and profitability, and a negative one with respect to profit variability. Interestingly, the degree of uncertainty appears to be a driving force of entry stronger than profitability, suggesting that the product proliferation process in the Spanish car market may have been mainly a consequence of lower uncertainty rather than the result of having a more profitable market

Financial protection of patients through compensation of providers: the impact of Health Equity Funds in Cambodia

Public providers have no financial incentive to respect their legal obligation to exempt the poor from user fees. Health Equity Funds (HEFs) aim to make exemptions effective by giving NGOs responsibility for assessing eligibility and compensating providers for lost revenue. We use the geographic spread of HEFs over time in Cambodia to identify their impact on out-of-pocket (OOP) payments. Among households with some OOP payment, HEFs reduce the amount paid by 35%, on average. The effect is larger for households that are poorer and mainly use public health care. Reimbursement of providers through a government operated scheme also reduces household OOP payments but the effect is not as well targeted on the poor. Both compensation models raise household non-medical consumption but have no impact on health-related debt. HEFs reduce the probability of primarily seeking care in the private sector.

Are sustainable companies less risky and more profitable?

The purpose of this study was to determine whether there were significant differences in accounting indicators when comparing sustainable enterprises to other similar companies that are not considered as sustainable. The Corporate Sustainability Index of BM (São Paulo Stock, Commodities and Futures Exchange) was the criterion selected to break down the samples into sustainable and non-sustainable enterprises. The accounting indicators were separated into two kinds: risk (dividend payout, percentage growth of assets, financial leverage, current liquidity, asset size, variability of earnings, and accounting beta) and return (ROA, ROE, asset turnover, and net margin). We individually analyzed the companies in the energy sector, followed by those in the banking sector, as well as the entire ISE portfolio as of 2008/2009, including all the sectors. Mann-Whitney tests were performed in order to verify the difference of the means between the groups (ISE and non-ISE). The results, considering the method chosen and the time span covered by the study, indicate that there are no differences between sustainable companies and the others, when they are assessed by the accounting indicators used here.