Risk Assessment Based on Financial Data: Market Response to Airline Accidents

The risk of catastrophic failures, for example in the aviation and aerospace industries, can be approached from different angles (e.g., statistics when they exist, or a detailed probabilistic analysis of the system). Each new accident carries information that has already been included in the experience base or constitutes new evidence that can be used to update a previous assessment of the risk. In this paper, we take a different approach and consider the risk and the updating from the investor's point of view. Based on the market response to past airplane accidents, we examine which ones have created a surprise response and which ones are considered part of the risk of the airline business as previously assessed. To do so, we quantify the magnitude and the timing of the observed market response to catastrophic accidents, and we compare it to an estimate of the response that would be expected based on the true actual cost of the accident including direct and indirect costs (full-cost information response). First, we develop a method based on stock market data to measure the actual market response to an accident and we construct an estimate of the full-cost information response to such an event. We then compare the two figures for the immediate and the long-term response of the market for the affected firm, as well as for the whole industry group to which the firm belongs. As an illustration, we analyze a sample of ten fatal accidents experienced by major US domestic airlines during the last seven years. In four cases, we observed an abnormal market response. In these instances, it seems that the shareholders may have updated their estimates of the probability of a future accident in the affected airlines or more generally of the firm's future business prospects. This market reaction is not always easy to explain much less to anticipate, a fact which management should bear in mind when planning a firm's response to such an event.     

Ethical Futures and Public-Private Partnerships: Peering Far Down the Track

This article employs an institutional perspective in formulating predictions about the ethical futures of privatization partnerships. Although this paper focuses on ethical concerns in the U.S. public sector, it incorporates a multinational dimension in (a) comparing the meaning of privatization among societies and (b) probing privatization financing in the global economy. Five assumptions that flow from institutional reasoning are made explicit as supports for subsequent predictions. The institutional logic shifts privatization conversation away from conventional debate about competition and efficiency toward centralizing forces in both sectors in response to globalization. In that regard, this study identifies the systemic erosion of (local) community integrity as the key privatization problem of the future.     

Examining the link between social responsibility and decision styles

The paper examines the factors that influence socially responsible decision making by individuals. The study found four social responsibility styles: Playing it Safe, Weather The Storm, Problem to Solve, and Hope it Goes Away. These styles describe individuals on the basis of decision style, propensity for risk, and coping style. The styles explain why people with different values might come to the same decision in the same circumstances.     

Comments on the Paper: Attacking the Market Split Problem with Lattice Point Enumeration

We present a few comments on the paper Attacking the market split problem with lattice point enumeration by A. Wasserman, published in Journal of Combinatorial Optimization, vol. 6, pp. 5–16, 2002.     

On Shortest k-Edge-Connected Steiner Networks in Metric Spaces

Given a set of points P in a metric space, let l(P) denote the ratio of lengths between the shortest k-edge-connected Steiner network and the shortest k-edge-connected spanning network on P, and let r = inf l(P) P for k 1. In this paper, we show that in any metric space, r 3/4 for k 2, and there exists a polynomial-time -approximation for the shortest k-edge-connected Steiner network, where = 2 for even k and = 2 + 4/(3k) for odd k. In the Euclidean plane, and .     

A Further Improved Approximation Algorithm for Breakpoint Graph Decomposition

Breakpoint graph decomposition is a crucial step in all recent approximation algorithms for SORTING BY REVERSALS, which is one of the best-known algorithmic problems in computational molecular biology. Caprara and Rizzi recently improved the approximation ratio for breakpoint graph decomposition from to + 1.4348 + , for any positive . In this paper, we extend the techniques of Caprara and Rizzi and incorporate a balancing argument to further improve the approximation ratio to + 1.4193 + , for any positive . These improvements imply improved approximation results for SORTING BY REVERSALS for almost all random permutations.     

Fundamentals of Health Risk Assessment. Use,Derivation, Validity and Limitations of Safety Indices

We investigated the way results of human health risk assessments are used, and the theory used to describe those methods, sometimes called the NAS paradigm. Contrary to a key tenet of that theory, current methods have strictly limited utility. The characterizations now considered standard, Safety Indices such as Acceptable Daily Intake, Reference Dose, and so on, usefully inform only decisions that require a choice between two policy alternatives (e.g., approve a food additive or not), decided solely on the basis of a finding of safety. Risk is characterized as the quotient of one of these Safety Indices divided by an estimate of exposure: a quotient greater than one implies that the situation may be considered safe. Such decisions are very widespread, both in the U. S. federal government and elsewhere. No current method is universal; different policies lead to different practices, for example, in California's Proposition 65, where statutory provisions specify some practices. Further, an important kind of human health risk assessment is not recognized by this theory: this kind characterizes risk as likelihood of harm, given estimates of exposure consequent to various decision choices. Likelihood estimates are necessary whenever decision makers have many possible decision choices and must weigh more than two societal values, such as in EPA's implementation of conventional air pollutants. These estimates can not be derived using current methods; different methods are needed. Our analysis suggests changes needed in both the theory and practice of human health risk assessment, and how what is done is depicted.     

Business student ethical values anew in the 1990s

This paper uses a Rokeach Value Survey methodology to again ask the question, now in the mid 1990s, whether business student ethics are different from non-business student ethics. Additionally, the paper addresses the question of whether a course can alter or change student ethics and values during a semester. Thirdly, this paper attempts to operationalize and empirically test and measure the new ethical concepts of moral management and moral maximization.     

Are g.p.a. and ethics related?

This article reports results of a study of some 200 college-aged students at California State University. Ethical values are measured using a subset of the well-known and frequently used Rokeach Value Survey. Using nonparametric statistical analysis, four value measures, and four different consistent tests of significance and probability, the research data, perhaps disappointedly for many observers including the authors, reveal that there is no relationship between college grade point average and student ethics. Statistical analysis was done on g.p.a. splits of less than 3.0 versus 3.0 or more and also on g.p.a. data for 2.5 or less versus 3.5 or more. In all cases, there are no significant relationships between high or low grade point averages and scores on ethical value rankings.     

Challenges to the Acceptance of Probabilistic Risk Analysis

This paper discusses a number of the key challenges to the acceptance and application of probabilistic risk analysis (PRA). Those challenges include: (a) the extensive reliance on subjective judgment in PRA, requiring the development of guidance for the use of PRA in risk-informed regulation, and possibly the development of robust or reference prior distributions to minimize the reliance on judgment; and (b) the treatment of human performance in PRA, including not only human error per se but also management and organizational factors more broadly. All of these areas are seen as presenting interesting research challenges at the interface between engineering and other disciplines.     

The Rhetoric and Reality of Public-Private Partnerships

Public-private partnership (or PPP) is now a very-fashionable concept in discourse about public sector management. For many, following a British lead, it focuses on attracting private financing for public projects. However there are several other forms of public-private mix that are also often described as partnerships, and some of them are not nearly so new. This article notes that several nodes of interest have developed to explore these mixes/partnerships, and raises some questions about them. We should consider whether all such mixes can properly be described as partnerships. Also we need to know more about their long history, to investigate the possibility of developing a classificatory system to help us better understand the various forms, and to consider what conditions are necessary for successful mixing or partnering, in particular for protecting the public interest at a time when market forces exercise great power.     

The foundations of the organizational culture literature: An integrative framework

A great deal has been written in recent years regarding aspects of corporate-cultural phenomena. This literature, however, should not be viewed as spontaneously emerging in the late 1970s. While increased international competition and, relatedly, the example of Japanese management appear to have prompted the discovery of culture in Western economic organizations, there is a large body of literature that preceded and has greatly influenced this recent corporate culture phenomenon. The purpose of this paper is to take stock of this literature, to present a framework for integrating these earlier works, and to discuss its implications.     

A New Era in Governmental Reform: Realizing Community

The good government models of the 1990s realized a focus that included reinventing, reengineer-ing, rethinking, quality, empowerment, and devolution of the organization. These organizational reform ideologies sought to increase involvement, improve productivity, manage performance, and drive results. One essential key that has been disregarded in these government models is the involvement of community in the decision-making process. This paper points to the importance of involving and empowering citizens in the decision-making process, particularly in regard to community justice based on the notion of restorative justice system. Community justice, a modern day reform movement with international proportions, is based on the principles of empowering community, repairing harm caused by a crime or disturbance, and reducing risk to the community.     

Riley and Cohen: Investment managers

Riley and Cohen, a new, small firm of investment managers, is facing a series of ethical dilemmas. In each case the members of the firm must choose between taking an action which will help insure their survival as a firm or rejecting the action because of moral considerations. One group of such actions may involve the possibility of direct unethical behavior by the new firm, as payment of a bribe, providing a client with an escort service, and making an undesirable political contribution. Another group of problems deals with how their investment decisions should be influenced by their personal values and those of their clients. These cases include investments in firms which produce condoms or cigarettes, practice abortion, discriminate against women and religious groups, do business with South Africa or the Soviet Union, or are involved in gambling. A consultant will make recommendations to Riley and Cohen about what to do, but ultimately the decision is theirs.     

Residential Building Codes,Affordability, and Health Protection: A Risk-Tradeoff Approach

Residential building codes intended to promote health and safety may produce unintended countervailing risks by adding to the cost of construction. Higher construction costs increase the price of new homes and may increase health and safety risks through income and stock effects. The income effect arises because households that purchase a new home have less income remaining for spending on other goods that contribute to health and safety. The stock effect arises because suppression of new-home construction leads to slower replacement of less safe housing units. These countervailing risks are not presently considered in code debates. We demonstrate the feasibility of estimating the approximate magnitude of countervailing risks by combining the income effect with three relatively well understood and significant home-health risks. We estimate that a code change that increases the nationwide cost of constructing and maintaining homes by $150 (0.1% of the average cost to build a single-family home) would induce offsetting risks yielding between 2 and 60 premature fatalities or, including morbidity effects, between 20 and 800 lost quality-adjusted life years (both discounted at 3%) each year the code provision remains in effect. To provide a net health benefit, the code change would need to reduce risk by at least this amount. Future research should refine these estimates, incorporate quantitative uncertainty analysis, and apply a full risk-tradeoff approach to real-world case studies of proposed code changes.     

Democratizing Risk Management: Successful Public Involvement in Local Water Management Decisions

This paper discusses a successful public involvement effort that addressed and resolved several highly controversial water management issues involving environmental and flood risks associated with an electrical generation facility in British Columbia. It begins with a discussion of concepts for designing public involvement, summarizing research that indicates why individuals and groups may find it difficult to make complex choices. Reasons for public involvement, and the range of current practices are discussed. Next, four principles for designing group decision process are outlined, emphasizing decision-aiding concepts that include value-focused thinking and adaptive management. The next sections discuss the Alouette River Stakeholder Committee process in terms of objectives, participation, process, methods for structuring values and creating alternatives, information sources, and results. Discussion and conclusions complete the paper.     

Zeroing in on leadership effectiveness: The methodological challenges of benchmarking leadership practices

Business success in the 21st century will be based on the widespread mastery of leadership roles, rather than on the directives of a professional or leadership elite. The first step for systematically enacting a leadership development agenda for our nation is to identify the factors, values or qualities most important to leadership effectiveness. Next, we must improve our understanding of how these guiding ideas and insights translate into what successful leaders do. As we perfect this understanding, we will need to operationally define the best practices of successful leaders. These best practices must then become benchmarks for intensive leadership development efforts.This article considers nine methodological challenges of the first agenda item-identification of the factors, values or qualities most important to leadership effectiveness. To illustrate these challenges, the authors use their own business leadership research as a case study. This research surveys 127 chairmen, chief executive officers, and presidents-a cross section of successful U.S.A. business leaders, including men and women from all parts of the nation who have diverse industry, racial, ethnic and religious backgrounds. The authors identify where methodological improvements are needed to cope with the challenges of leadership research. They suggest important directions for methodological development and propose three minimum standards for future leadership research.     

A comparative study of U.S. and Iraqi students

This study uses a sample comprised of U.S. students and Iraqi students to determine if differences occur over ethical perceptions based on cultural/demographic issues. Irrespective of demographics, the results of this study indicate significant cultural differences between Iraqi students and American students with regard to selected ethical issues concerning graduate education. Specifically the differences occurred in the students' perceptions of winning is everything, selling one's soul, logic before emotion, and pander to professors. Iraqi students consistently viewed these beliefs as more necessary for success in their graduate education than did their American counterparts.     

Efficient Heuristics for Orientation Metric and Euclidean Steiner Tree Problems

We consider Steiner minimum trees (SMT) in the plane, where only orientations with angle , 0 i – 1 and an integer, are allowed. The orientations define a metric, called the orientation metric, , in a natural way. In particular, ₂ metric is the rectilinear metric and the Euclidean metric can beregarded as metric. In this paper, we provide a method to find an optimal SMT for 3 or 4 points by analyzing the topology of SMT's in great details. Utilizing these results and based on the idea of loop detection first proposed in Chao and Hsu, IEEE Trans. CAD, vol. 13, no. 3, pp. 303–309, 1994, we further develop an O(n²) time heuristic for the general SMT problem, including the Euclidean metric. Experiments performed on publicly available benchmark data for 12 different metrics, plus the Euclidean metric, demonstrate the efficiency of our algorithms and the quality of our results.     

Leadership styles,Machiavellianism, and needs of Saudi Arabian managers

The findings indicated that the economic environment and the cultural and religious orientations of managers in Saudi Arabia significantly influenced their scores on Machiavellianism and the relationships between their needs and leadership styles. In comparison to the U.S. norms the Saudi Arabian managers were found to be lower on Machiavellianism. Need for achievement was found to be positively related to need for power and structure dimension of leadership. The findings also showed Machiavellianism to be positively related to need for power and negatively related to consideration dimension of leadership. The findings are discussed in the context of a fast-growing economy and a highly religious and a traditional society.