Search

This article warns that cyclical stocks are affecting the delivery of routine healthcare services. Planning fails when a shock occurs and policy-makers and managers need to adapt to budgetary over-estimation. To ensure a sustainable level of services at all stages of the economic cycle, cyclical impact should be systematically determined. This would improve decision-making and help minimize institutional and political impediments. However, developing these capabilities is difficult, requiring a multi-year perspective to be incorporated into the annual budgeting process. An important prerequisite to do this is for stakeholders to understand the impact that cyclicality has on healthcare Healthcare organizations are challenged to consistently deliver routine services during crises. This article examines how healthcare budgets are affected by business cycles, using a structured literature review to examine the public administration, public sector accounting and healthcare literature. The results demonstrate that budgetary techniques fail during a recession—requiring an emergency response. Complexities in forecasting accurate and credible targets, due to the difficulty of predicting the timing and magnitude of recessions, is leading to budgetary over-estimation. The authors call for more research on budgetary planning capabilities to measure the impact of the economic cycles on budgetary processes to minimize the need for forecasting. Interestingly, the authors found that European studies in this area tended to be published in accounting journals, while US studies were more likely to be published in public administration journals. [ABSTRACT FROM AUTHOR]

Using an entirely new dataset of audited filings from firms that manage hedge funds, this study examines whether the hedge fund compensation contract aligns managerial incentives and investor interests. Our novel dataset allows us to distinguish between firms focused exclusively on hedge fund management and diversified firms offering products in addition to hedge funds. Our results for compensation data of hedge fund only management firms confirm that compensation increases as assets under management increase, despite increased costs and performance diseconomies of scale. Hedge funds managed by diversified firms have significantly lower performance. A relatively small proportion of the compensation from these firms is generated from hedge funds. The results are consistent with diversified hedge fund firms having weaker alignment between managerial incentives and investment performance. [ABSTRACT FROM AUTHOR]

Purpose -- The purpose of this paper is to study the relationship between reporting a loss and changes in board quality. Low quality corporate governance is associated with adverse accounting outcomes and is characterised by the lack of non-executive and independent directors on the board. Changes in these board quality indicators in response to the reporting of a loss and conditioned by the severity of the loss are examined. Design/methodology/approach -- This study uses four years of board information spanning the report of an initial loss for companies listed on the UK stock exchange. An industry and size matched control sample is used in a difference-in-difference analysis to isolate the impact of the loss from underlying changes in board quality. Findings -- Overall the results indicate that more severe initial loss events precipitate improvements in board quality over and above the control sample as well as less severe loss events. Research limitations/implications -- Although unambiguous, the reporting of a loss is only one measure of underperformance. Also the board quality indicators used in this study are two from several individual corporate governance variables and amalgamations used in the extent literature. Practical implications -- The findings demonstrate that the relationship between corporate governance and performance is endogenous and that the majority of any improvement in board quality actually anticipates the reporting of the loss. Any celebration of improvements in governance need to be tempered by an understanding of the precariousness of the firms at which these improvements are made. Originality/value -- This study contributes to a research stream that examines negative shocks, and losses in particular, as an event likely to precipitate firm-level changes in board quality, i.e. firms tend not to make improvements to board quality without the impetus to do so. [ABSTRACT FROM AUTHOR]

Purpose - This paper aims to add to the debate regarding the appropriate methodology to purify tainted components from shari'ah-compliant equities. Design/methodology/approach - Based on the Qur'anical prohibition against riba and an analysis of the purification methodology recommended by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) shari'ah Standard 21, this paper highlights the shortcomings in Standard 21 and references the corporate finance literature to argue for the need to also purify the interest tax shield from debt. Findings - Purification is a pivotal element of the Islamic investment process, yet Standard 21 permits a loose interpretation which causes portfolios to be under-purified. Standard 21 also makes no mention of the interest tax shield from debt even though the benefits are at odds with the principles of social justice in Islam. That there is no mention of the interest tax shield from debt in the (limited) literature on the purification of Islamic equities is puzzling. Practical implications - This paper has implications for the Islamic funds industry and for devout Muslim investors. Originality/value - The specific contribution of this paper is the identification of the interest expense tax shield (well-established in the corporate finance literature) as a significant non-compliant riba-related component that needs to be considered in the purification process. [ABSTRACT FROM AUTHOR]

The 'glass cliff' posits that when women achieve high profile roles, these are at firms in precarious positions. Previous research analysed appointments (male/female), estimated the precariousness of firms involved and drew inferences about the glass cliff. This study is different as it directly tests the relationship between a precarious situation and changes in board gender diversity. The sample is companies listed on the UK stock exchange reporting an initial loss in the years 2004-2006. A matched control sample is used in a difference-in-differences analysis to avoid inadvertently attributing improvements arising from societal/regulatory changes in gender diversity to the loss event. Findings suggest that when the loss is 'big' there is a difference in the increase in gender diversity versus both the control and the 'small' loss subsamples, i.e. compelling evidence of the glass cliff. In the context of ongoing political and social debates about women on boards our work (i) identifies continuing structural barriers for women ascending to board level in that women are more likely to be over-represented on boards of companies that are more precarious and (ii) sounds a note of caution about celebrating increased gender diversity on boards without considering the precariousness of the company involved. [ABSTRACT FROM AUTHOR]