MAS Integration and Controllership Effectiveness: Evidence of a Preparer-User Perception Gap

Recent evidence suggests that managers establish a positive link between management accounting system (MAS) integration and controllership effectiveness, which is fully mediated by the perceived consistency of financial language. Our paper extends this research by analyzing whether controllers have similar perceptions on MAS design. Testing a series of multi-group structural equation models, we find evidence for a preparer-user perception gap with respect to the mediating impact of a consistent financial language. Our results contribute to the still-ongoing controversial debate on MAS integration by indicating that the effectiveness of MAS design cannot be evaluated solely from an instrumental perspective independent from users’ perceptions.

What Does the Market Learn from Stock Offering Revisions?

We examine the disclosure of size revisions of seasoned stock offerings to see what information revisions impart to investros. Revisions could deliver firm-originated infoirmation, which discloses something managers know about the firm. Alternatively, they could disseminate market-originated information, which is information market participants have but which is not conveyed until trading takes place. Our results reject the notion that revisions reveal firm-originated news. Instead, the results are consistent with the market-originated news hypothesis and suggest a mechanism that investros and underwriters use to learn about the demand for an offering.

Evaluating the impact of vertical integration on health system peformance

Vertical integration is grounded in economic theory as a corporate strategy for reducing cost and enhancing efficiency. There were three purposes for this dissertation. The first was to describe and understand vertical integration theory. The review of the economic theory established vertical integration as a corporate cost reduction strategy in response to environmental, structural and performance dimensions of the market. The second purpose was to examine vertical integration in the context of the health care industry, which has greater complexity, higher instability, and more unstable demand than other industries, although many of the same dimensions of the market supported a vertical integration strategy. Evidence on the performance of health systems after integration revealed mixed results. Because the market continues to be turbulent, hybrid non-owned integration in the form of alliances have increased to over 40% of urban hospitals. The third purpose of the study was to examine the application of vertical integration in health care and evaluate the effects. The case studied was an alliance formed between a community hospital and a tertiary medical center to facilitate vertical integration of oncology services while maintaining effectiveness and preserving access. The economic benefits for 1934 patients were evaluated in the delivery system before and after integration with a more detailed economic analysis of breast, lung, colon/rectal, and non-malignant cases. A regression analysis confirmed the relationship between the independent variables of age, sex, location of services, race, stage of disease, and diagnosis, and the dependent variable, cost. The results of the basic regression model, as well as the regression with first-order interaction terms, were statistically significant. The study shows that vertical integration at an intermediate health care system level has economic benefits. If the pre-integration oncology group had been treated in the post-integration model, the expected cost savings from integration would be 31.5%. Quality indicators used were access to health care services and research treatment protocols, and access was preserved in the integrated model. Using survival as a direct quality outcome measure, the survival of lung cancer patients was statistically the same before and after integration. ^

Empirical Analysis of Credit Risk Regime Switching and Temporal Conditional Default Correlation in Credit Default Swap Valuation: The Market liquidity effect

In this paper, we extend the debate concerning Credit Default Swap valuation to include time varying correlation and co-variances. Traditional multi-variate techniques treat the correlations between covariates as constant over time; however, this view is not supported by the data. Secondly, since financial data does not follow a normal distribution because of its heavy tails, modeling the data using a Generalized Linear model (GLM) incorporating copulas emerge as a more robust technique over traditional approaches. This paper also includes an empirical analysis of the regime switching dynamics of credit risk in the presence of liquidity by following the general practice of assuming that credit and market risk follow a Markov process. The study was based on Credit Default Swap data obtained from Bloomberg that spanned the period January 1st 2004 to August 08th 2006. The empirical examination of the regime switching tendencies provided quantitative support to the anecdotal view that liquidity decreases as credit quality deteriorates. The analysis also examined the joint probability distribution of the credit risk determinants across credit quality through the use of a copula function which disaggregates the behavior embedded in the marginal gamma distributions, so as to isolate the level of dependence which is captured in the copula function. The results suggest that the time varying joint correlation matrix performed far superior as compared to the constant correlation matrix; the centerpiece of linear regression models.

Regional Integration and Industrial Location in a Landlocked Spatial Economy

Regional integration proposals often require agreements between countries that differ in geographic size, resource endowments, transportation assets, technologies, and product quality. In this asymmetric setting, questions arise about the potential for mutual gains and the distribution of benefits among industries and workers in each country. This paper examines how regional integration between a small landlocked country and a large neighboring country--with a unique port facility that both nations must use to export goods--affects the wage and location decisions of firms, the allocation of labor, the welfare of each country's workers and firms, and aggregate measures of economic welfare in each country and the region. A simulated spatial labor market model is used to explore the economic effects of various stages of regional integration. Beginning with autarky as a benchmark case, we consider two forms of regional integration: partial mobility (mobile labor with geographically restricted firms); and full mobility (mobile labor and firms) with convergence of production technologies and product quality.

Increasing Derivatives Market Activity in Emerging Markets and Exchange Rate Exposure

Understanding the effects of off-balance sheet transactions on interest and exchange rate exposures has become more important for emerging market countries that are experiencing remarkable growth in derivatives markets. Using firm level data, we report a significant fall in exposure over the past 10 years and relate this to higher derivatives market participation. Our methodology is composed of a three stage approach: First, we measure foreign exchange exposures using the Adler-Dumas (1984) model. Next, we follow an indirect approach to infer derivatives market participation at the firm level. Finally, we study the relationship between exchange rate exposure and derivatives market participation. Our results show that foreign exchange exposure is negatively related to derivatives market participation, and support the hedging explanation of the exchange rate exposure puzzle. This decline is especially salient in the financial sector, for bigger firms, and over longer time periods. Results are robust to using different exchange rates, a GARCH-SVAR approach to measure exchange rate exposure, and different return horizons.

Hospital district viability and Medicaid /market changes

Hospital districts (HD) that serve the uninsured and the needy face new challenges with the implementation of Medicaid managed. The potential loss of Medicaid patients and revenues may affect the ability to cost-shift and subsequently decrease the ability of the HD to meet its legal obligation of providing care for the uninsured. ^ To investigate HD viability in the current market, the aims of this study were to: (1) describe HD's environment, (2) document the HDs strategic response, (3) document changes in the HD's performance (patient volume) and financial status, and (4) determine whether relationships or trends exist between HD strategy, performance and financial status. ^ To achieve these aims, three Texas HDs (Fort Worth, Lubbock, and San Antonio) were selected to be evaluated. For each HD four types of strategic responses were documented and evaluated for change. In addition, the ability of each HD to sustain operations was evaluated by documenting performance and financial status changes (patient volume and financial ratios). A pre-post case study design method was used in which the Medicaid managed care “rollout'” date, at each site, was the central date. First, a descriptive analysis was performed which documented the environment, strategy, financial status, and patient volume of each hospital district. Second, to compare hospital districts, each hospital district was: (i) classified by a risk index, (ii) classified by its strategic response profile, and (iii) given a performance score based upon pre-post changes in patient volume and financial indicators. ^ Results indicated that all three HDs operate in a high risk environment compared to the rest of the nation. Two HDs chose the “Status Quo” response whereas one HD chose the “Competitive Proactive” response. Medicaid patient volume decreased in two of three HDs whereas indigent patient volume increased in two of the three (an indication of increasing financial risk). Total patient revenues for all HDs increased over the study period; however, the rate of increase slowed for all three after the Medicaid rollout date. All HDs experienced a decline in financial status between pre-post periods with the greatest decline observed in the HD that saw the greatest increase in indigent patient volume. ^ The pre-post case study format used and the lack of control study sites do not allow for assignment of causality. However, the results suggest possible adverse effects of Medicaid managed care and the need for a larger study, based on a stronger evaluation research design. ^

Democratic Legitimation of Trade Policy Tomorrow: TTIP, Democracy and Market in the Swiss Constitution

Free Trade Agreements (FTAs) are increasingly more concerned with regulatory convergence, rather than trade liberalisation through elimination of tariffs. This appears to result more often in so-called dynamic trade agreements, which still evolve after adoption. Further economic integration in democracies, however, depends on the support of the constituency. This article takes a closer look at the democratic legitimation of global economic integration in a case study on Switzerland. It finds that the current principles and institutions of democracy in Switzerland are unlikely to fully accommodate the new regulatory challenges of dynamic FTAs.

Integration versus Outsourcing in Stable Industry Equilibrium with Communication Networks

For the selection of a firm's structure between vertical integration and arm's-length outsourcing, the importance of the thickness of the market had been emphasized in the previous literature. Here we take account of communication networks such as telephone, telex, fax, and the Internet. By doing so, we could illustrate the relationship between communication networks and the make-or-buy decision. With communication network technology differing in each type of firm, both vertically integrated firms and arm's-length outsourcing firms coexist, which was never indicated in the previous literature. However, when common network technology is introduced, such coexistence generically does not occur.

Financial Cooperation in East Asia

This paper addresses the rationale for financial cooperation in East Asia. It begins by giving a brief review of developments after the Asian currency crisis, and argues that enhancing regional financial cooperation both quantitatively and qualitatively will require: (1) upgrading surveillance capabilities in the region, and (2) creating a clear division of labor between regional institutions and the IMF. It also mentions the issue of membership and the background forces that have led to the duplication of similar forums in East Asia. Although the concern over crisis management is the central issue in East Asian financial cooperation, other issues such as exchange rate policy coordination and fostering regional capital markets are discussed as well.

Do Foreign Currency Deposits Promote or Deter Financial Development in Low-Income Countries? An Empirical Analysis of Cross-Country Data

Foreign currency deposits (FCD) are prevalent in many low-income developing countries, but their impact on bank lending has rarely been examined. An examination of cross-country data indicates that a higher proportion of FCD in total deposits is associated with growth in private credit only in inflationary circumstances (over 24 percent of the annual inflation rate). FCD can lead to a decline in private credit below this threshold level of inflation. Given that FCD exhibit persistence, deregulating them in low-income countries may do more harm than good on financial development in the long term, notably after successful containment of inflation.

Transformation of the Financial Sector in Indonesia

Introduction : The source and deployment of finance are central issues in economic development. Since 1966, when the Soeharto Administration was inaugurated, Indonesian economic development has relied on funds in the form of aid from international organizations and foreign countries. After the 1990s, a further abundant inflow of capital sustained a rapid economic development. Foreign funding was the basis of Indonesian economic growth. This paper will describe the mechanism for allocating funds in the Indonesian economy. It will identify the problems this mechanism generated in the Indonesian experience, and it will attempt to explain why there was a collapse of the financial system in the wake of the Asian Currency Crisis of 1997. History of the Indonesian Financial system The year 1966 saw the emergence of commercial banks in Indonesia. It can be said that before 1966 a financial system hardly existed, a fact commonly attributed to economic disruptions like the consecutive runs of fiscal deficit and hyperinflation under the Soekarno Administration. After 1996, with the inauguration of Soeharto, a regulatory system of financial legislation, e.g. central banking law and banking regulation, was introduced and implemented, and the banking sector that is the basis of the current financial system in Indonesia was built up. 　　　The Indonesian financial structure was significantly altered at the first financial reform of 1983. Between 1966 and 1982, the banking sector consisted of Bank Indonesia (the Central Bank) and the state-owned banks. There was also a system for distributing the abundant public revenue derived from the soaring oil price of the 1970s. The public finance distribution function, incorporated in Indonesian financial system, changed after the successive financial reforms of 1983 and 1988, when there was a move away from the monopoly-market style dominated by state-owned banks (which was a system of public finance distribution that operated at the discretion of the government) towards a modern market mechanism. The five phases of development The Indonesian financial system developed in five phases between 1966 and the present time. The first period (1966-72) was its formative period, the second (1973-82) its policy based finance period under soaring oil prices, the third (1983-91) its financial-reform period, the fourth (1992-97) its period of expansion, and the fifth (1998-) its period of financial restructuring. The first section of this paper summarizes the financial policies operative during each of the periods identified above. In the second section changes to the financial sector in response to policies are examined, and an analysis of these changes shows that an important development of the financial sector occurred during the financial reform period. In the third section the focus of analysis shifts from the general financial sector to particular commercial banks’ performances. In the third section changes in commercial banks’ lending and fund-raising behaviour after the 1990s are analysed by comparing several banking groups in terms of their ownership and foundation time. The last section summarizes the foregoing analyses and examines the problems that remain in the Indonesian financial sector, which is still undergoing restructuring.

Financial Policies and Dynamic Game Simulation in Poland and Hungary

Recently, steady economic growth rates have been kept in Poland and Hungary. Money supplies are growing rather rapidly in these economies. In large, exchange rates have trends of depreciation. Then, exports and prices show the steady growth rates. It can be thought that per capita GDPs are in the same level and development stages are similar in these two countries. It is assumed that these two economies have the same export market and export goods are competing in it. If one country has an expansion of monetary policy, price increase and interest rate decrease. Then, exchange rate decrease. Exports and GDP will increase through this phenomenon. At the same time, this expanded monetary policy affects another country through the trade. This mutual relationship between two countries can be expressed by the Nash-equilibrium in the Game theory. In this paper, macro-econometric models of Polish and Hungarian economies are built and the Nash- equilibrium is introduced into them.

Inferring the Effects of Vertical Integration from Entry Games : An Analysis of the Generic Pharmaceutical Industry

This paper introduces a novel method for examining the effects of vertical integration. The basic idea is to estimate the parameters of a vertical entry game. By carefully specifying firms' payoff equations and constructing appropriate tests, it is possible to use estimates on rival profit effects to make inferences about the existence of vertical foreclosure. I estimate the vertical entry model using data from the US generic pharmaceutical industry. The estimates indicate that vertical integration is unlikely to generate anticompetitive foreclosure effects. On the other hand, significant efficiency effects are found to arise from vertical integration. I use the parameter estimates to simulate a policy that bans vertically integrated entry. The simulation results suggest that such a ban is counterproductive; it is likely to reduce entry into smaller markets.

Intra-regional trade between China, Japan, and Korea : before and after the financial crisis

East Asian economies have been heavily dependent on the U.S. and EU markets, especially for the export of final goods. Therefore, once the financial crisis hit Western economies hard, the East Asian economies lost their major markets.Their production networks then worked to the region's disadvantage and stifled industrial development.This reflects the vulnerability of the East Asian economies which have adopted an export-led growth strategy. Such vulnerability needs to be addressed to prevent future economic crises, as well as to sustain economic growth. This paper examines the trade structure of the three countries-China, Japan, and Korea-before and after the Lehman Shock, and discusses how the three countries should cooperate in addressing imbalances in the trade structure.