Estimating economic relationships subject to firm- and time-varying equality and inequality constraints

Applied econometricians often fail to impose economic regularity constraints in the exact form economic theory prescribes. We show how the Singular Value Decomposition (SVD) Theorem and Markov Chain Monte Carlo (MCMC) methods can be used to rigorously impose time- and firm-varying equality and inequality constraints. To illustrate the technique we estimate a system of translog input demand functions subject to all the constraints implied by economic theory, including observation-varying symmetry and concavity constraints. Results are presented in the form of characteristics of the estimated posterior distributions of functions of the parameters. Copyright (C) 2001 John Wiley Sons, Ltd.

The relevance to firm valuation of capitalising intangible assets in total and by category

Debate about the appropriate treatment of intangible assets can benefit from knowledge about the relevance of their financial statement capitalisation to valuation of firms. With rules permitting or requiring intangible asset capitalisation, Australia provides an ideal setting to obtain this evidence. This paper reports findings that indicate that capitalisation of intangibles is value-relevant for Australia's largest firms. Results indicate that investors place greater value on capitalised goodwill than on other categories of capitalised balance sheet items. Similarly, capitalisation of identifiable intangible assets adds value to large firms. However, research and development capitalisation does not affect the value of firms in our study.

A field trial of the effect of improved piglet management on smallholder sow productivity in the Philippines

We conducted a randomised, controlled field trial during 1998/1999 to evaluate the hypothesis that improved piglet management would improve the reproductive performance of smallholder sows. Simple changes were introduced into the treatment herds including the construction of a heated piglet-separation pen, vitamin injections, creep feeding and early weaning. The control herds were unchanged. Data were collected from all sows in each enrolled herd over two farrowings. We enrolled 176 sows, including 170 (96 treatment and 74 control) sows that remained throughout the study period. Significant differences in the reproductive performance of treatment and control sows were recorded for interfarrowing interval (median 176 versus 220 days), average number liveborn over 2 litters (11 versus 12), and average preweaning mortality over 2 litters (0 versus 37%). Based on a discount rate of 17%, the benefit-cost ratio of the treatment was 11.1 and 12.1 over 3 and 5 years, respectively. (C) 2001 Elsevier Science B.V. All rights reserved.

Conservative management of mesenchymal hamartomas of the chest wall

Mesenchymal hamartomas of the chest wall are rare benign lesions usually discovered in infancy. The authors present their experience with 3 cases. All of these cases were managed initially conservatively, although 1 child required a thoracotomy and partial tumour resection at 5 months of age because of respiratory compromise. The other 2 children have now reached 5 and 6 years of age with the tumors becoming less prominent. The authors believe many cases can be managed conservatively because malignant change has not been reported, and the lesions often become relatively smaller as the child grows. J Pediatr Surg 36:1346-1349, Copyright (C) 2001 by W.B. Saunders Company.

Accuracy of frozen section for the operative management of endometrial cancer

Objective To assess the accuracy of intra-operative frozen section reports at identifying the features of high risk uterine disease compared with final histopathology. Design Retrospective study. Methods The records, of 460 patients with uterine cancer registered with the Queensland Centre for Gynaecological Cancer between January 1, 1996 and December 31, 1998 were reviewed. Intra-operative frozen section was undertaken in 260 patients with endometrial adenocarcinoma. Frozen section pathology was compared with the final histopathology reports. Inter-observer reliability was assessed using percentage agreement and kappa statistics. Clinical notes were also reviewed to determine if errors resulted in sub-optimal patient care. Results Respectively, tumour grade and depth of myometrial invasion were accurately reported in 88.6% of cases (expected 61.5%, Kappa 0.70) and 94.7% (expected 53.8%, Kappa 0.89). Errors were predominantly attributable to difficulties with respect to the interpretation of tumour grade. The error resulted in the patient receiving sub-optimal surgical management in only I I cases (5.3%) Conclusion Frozen section is accurate at identifying the features of high risk uterine disease in the setting of endometrial cancer and can play an important role in directing primary operative management.

A risk-based system to penalize and reward line management for occupational safety and health performance

Penalizing line management for the occurrence of lost time injuries has in some cases had unintended negative consequences. These are discussed. An alternative system is suggested that penalizes line management for accidents where the combination of the probability of recurrence and the maximum reasonable consequences such a recurrence may have exceeds an agreed limit. A reward is given for prompt effective control of the risk to below the agreed risk limit. The reward is smaller than the penalty. High-risk accidents require independent investigation by a safety officer using analytical techniques. Two case examples are given to illustrate the system. Continuous safety improvement is driven by a planned reduction in the agreed risk limit over time and reward for proactive risk assessment and control.

Securing the commercial internet: Lessons learned in developing a postgraduate course in information security management

This paper describes the inception, planning and first delivery of a security course as part of a postgraduate ecommerce program. The course is reviewed in terms of existing literature on security courses, the common body of knowledge established for security professionals and the job market into which students will graduate. The course described in this paper is a core subject for the e-commerce program. This program was established in 1999 and the first batch of students graduated in 2001. The program is offered at both postgraduate and undergraduate level. The work described here relates to the postgraduate offering. Students on this program are graduates of diverse disciplines and do not have a common e-commerce or business background.

On the relation between ownership structure and capital structure

The agency relationship between managers and shareholders has the potential to influence decision-making in the firm which in turn potentially impacts on firm characteristics such as value and leverage. Prior evidence has demonstrated an association between ownership structure and firm value. This paper extends the literature by examining a further link between ownership structure and capital structure. Using an agency framework, it is argued that the distribution of equity ownership among corporate managers and external blockholders may have a significant relation with leverage. The empirical results provide support for a positive relation between external blockholders and leverage, and non-linear relation between the level of managerial share ownership and leverage. The results also suggest that the relation between external block ownership and leverage varies across the level of managerial share ownership. These results are consistent with active monitoring by blockholders, and the effects of convergence-of-interests and management entrenchment.

Auditor independence and fee dependence

This study investigates whether fee dependence within the audit firms' offices jeopardises auditor independence. Fee dependence is examined at both the national audit firm level as well as the local office level and in a setting where public disclosure of fees is mandatory. We focus our tests on audit fee dependence and at the same time we control for the effects of non-audit service fee dependence post the 1989 mergers. We operationalise the exercise of independent judgement in auditing by the propensity to issue qualified audit opinions. If fee dependence affects auditors' independent judgement, then auditors are less likely to qualify the accounts. The study's results show that the level of auditor fee dependence does not affect auditor propensity to issue unqualified audit opinions. The findings remain robust to a number of sensitivity tests including the analyses controlling for the effects of non-audit service fee dependence and other settings in which there is heightened pressure on auditors to confront the effects of fee dependence on exercising independent audit judgement. (C) 2002 Elsevier Science B.V. All rights reserved.