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A measure of the cost of capital is developed that incorporates the dynamic effects of tax changes and tax asymmetries. Estimates of the cost of capital are made using an unbalanced panel of 1987 U.K. quoted companies over the period 1971 to 1984. There is wide cross-sectional variation in the cost of capital. The measure is used in estimating an equation where this cross-sectional variation is found to be a significant determinant of the level of company investment.
Over the years, World Bank missions recommended establishing development finance companies (DFCs) to provide long term financing for worthwile ( primarily industrial ) projects. The author reviews the DFCs performance and states that in general, it has been disappointing. Few are self supporting; a third are in serious difficulty, and by 1983 half of the banks had arrears on a quarter of their loans. By the early 1980s, the Bank's wisdom in establishing DFCs was being questioned. From the recent experience of a group of developed countries, the author concludes that: 1) an efficient banking system is central to the promotion of economic growth, 2) the performance of financial markets is not necessarily furthered by artificially lengthening the maturity of bank lending, 3) economic growth is not promoted through the financing of projects, 4) corporate organization, not project activity, is what distinguishes developed from developing countries. Economic growth relies on the structure and quality of financial institutions., and 5) financial assistance is only part of what is needed to create an appropriate institutional structure. Monitoring and rewarding individuals may often be more pertinent.
The World Bank Development Report (World Bank, 1989) provides an excellent synthesis of current wisdom about the relationship between financial systems and economic development. The purpose of this article is to evaluate the proposals presented in that Report. The Report addresses four sets of issues: macroeconomic policy to promote growth, the role of financial liberalization, government intervention in credit markets, and the design of financial systems. It puts forward the following blueprint for reform:
Reform should start by getting the fiscal deficit under
control and establishing macroeconomic stability. The
government should then scale down its directed credit
programs and adjust the level and pattern of interest rates to bring them into line with inflation and other market forces. In the initial stage of reform the government should also try to improve the foundations of finance—that is, the accounting and legal systems, procedures for the enforcement of contracts, disclosure requirements, and the structure of prudential regulation and supervision. It should encourage managerial autonomy in financial institutions. If institutional insolvency is widespread, the government may need to restructure some financial institutions in the early stages of reform.
Summary. Applicants for admission to St Mary's Hospital Medical School in 1986 were short-listed for interview by one of four assessors, who each made their assessments on a nine-item pro forma. One short-lister had also been studied in detail during 1981. Short-listers used the full range of possible judgements, in approximately the proportions requested. Only minor differences were found between them in the mean and range of their judgements, suggesting that similarity of standards can be maintained while using a number of separate short-listers. A confirmatory factor analysis of individual short-listers' judgements showed that all were extracting three separate factors, named ‘Academic ability’, ‘Interests’ and ‘Contribution to community’, although the less experienced short-listers differentiated these items less well than the more experienced. The short-lister assessed in 1981 and 1986 had retained an almost identical factor structure over the 5-year period.
To assess whether the ethnic origin of applicants affects their likelihood of being accepted into medical school in the United Kingdom the outcome for the 2399 applicants who applied to read medicine at university in 1986 and included St Mary's Hospital Medical School as one of their five choices was studied prospectively. Altogether 2040 of the 2399 applicants were British (United Kingdom) nationals, constituting 24.7% (n = 8249) of all home applicants for medicine in 1986, and 1971 of them with postal addresses in the United Kingdom were sent questionnaires asking about their ethnic origin, whether English was their first language, and about their attitudes to ethnic monitoring. A total of 1817 (92.2%) applicants returned the questionnaire, 401 (22.6%) saying that they were from an ethnic minority group and 393 (21.6%) having non-European surnames. Multiple logistic regression identified 11 significant predictors of successful application, of which grades at O and A level, application after A levels, and date of application were the most important. After taking these four variables into account the predicted acceptance rates for home students on the basis of their application forms alone were 47.8% for white applicants and 35.6% for applicants from ethnic minority groups compared with actual acceptance rates of 49.6% and 27.3%, respectively. The difference in success of white and non-white applicants could partly but not entirely be explained by differences in the characteristics considered to be important in a professional context by selectors during shortlisting of candidates: academic ability, interests, and contribution to the community. No differences in the success rate of applicants from ethnic minority groups to individual medical schools could be identified. More research is needed to discover how perceptions of professional suitability are assessed from application forms and interviews.
Information technology has tremendous potential as a tool of management in developing ever more sophisticated ways of handling management information. But it can never do away with the need for management, the process of using human ingenuity and creativity to come up with practical solutions to real problems. There is a danger that the technology could be used to diminish the human dimension of management.
This article presents a roundtable discussion on the appropriate level of regulation in Europe. Manfred Neumann presented a theoretical rationale that leans towards the individualistic approach of government competition. Michael Emerson discussed the flexibility offered by the Treaties. Colin Myer describes the characteristics of the industry relevant to the design of its regulation. Lastly, Stephen Breyer shared his comments from a U.S. perspective.
This paper investigates the effect of share repurchase through transferable put rights (TPRs) on shareholder wealth and corporate control. Transferable put rights make the put option, which is implicit in a tender offer, marketable. Shareholders who do not tender their shares increase their proportional ownership of the firm and extract some of the gains of the tender offer from exiting shareholders. Finally, TPRs improve tax efficiency by ensuring that only shareholders who have the highest tax bases will tender.
In this article we attempt to determine the impact of a defendant's strategic choice of trial mode on the judicial process. In a sequential signalling game setting, we model a criminal trial using varying assumptions regarding the sophistication of the agents, while maintaining the assumption that the information processing of juries is noisier than that of judges. We demonstrate that under certain sets of assumptions, more defendants may choose a jury trial, even though the equilibrium conviction rate is higher. This and other hypotheses suggested by our analysis are tested on a sample of actual trial results.
This paper reports some early findings from a major research project which explores strategic service change in the NHS in the post-Griffiths era. We begin by briefly reviewing the relevant literature on change and general management in the NHS, and go on to outline the particular features of the research design. We then isolate some key emergent themes from a preliminary analysis of the data, highlighting two themes in greater depth. In our final section, we will attempt to reflect on some of the common factors associated with the achievement of strategic change. The project is funded by the NHSTA and a consortium of eight Regional Health Authorities.
This paper uses a database of 58 financial innovations from 1974–1986 to examine how investment banks are compensated for their investments in developing new products. Investment banks that create new products do not charge higher prices in the brief period of ‘monopoly’ before imitative products appear, and in the long-run charge prices below, not above, those charged by rivals offering imitative products. However, banks capture a larger share of underwritings with innovations than with imitative products. One interpretation of the price and quantity evidence is that innovators become inframarginal rivals that enjoy lower costs of trading, underwriting, and marketing.
This paper provides a method for a manufacturing systems designer to generate the processing times of random families of parts from expert predictions or descriptions for the purposes of systems simulation. This approach is especially useful in circumstances in which it is not possible to collect data on parts' processing times or in which the family of parts to be produced is not currently realized, but is based on longer term market analysis and technological forecasts. Appropriate marginal distributions on processing times are provided by use of the inverse transformation method. The correlation structure between machines and between parts is also modelled from the expert data in order to provide samples from the random matrix representing the processing times of the various parts on different machines. This is difficult in general, since it is necessary to provide samples from a random matrix whose row vectors and columns vectors have independent correlation structures. The difficulties of providing samples with representative correlation matrices amongst both machines and parts are resolved by using an approximation method for intermachine correlations along with some assumptions concerning the nature of manufacture in a modern multi-product environment.
The article draws on the experience of four sectors of the U.K. economy to suggest what the competetive conditions of the next decade might look like. The distinction is made between barries to entry and barries to success. Strategic management in the more successful companies appears to involve the common ability to sustain strategic flexibility. The majority of the piece indicates how this quality has been fashioned and how the process of its creation and maintenance has been managed in the companies concerned. Evidence from the four sectors is used to speculate on some of the key determinants of strategic flexibility in the 1990s.
A discussion of corporate strategies in recession and recovery during the period 1979-85. Topics covered include recession strategies, taking the domestic appliance and office furniture industries as examples, details of how the research was carried out and social structure and strategic choice.