DETERMINING THE APPROPRIATE DISCOUNT RATES IN PURE CAPITAL RATIONING

This paper proposes an interpretation of the pure capital rationing problem as it is faced by many managers in decentralized firms in which budgets serve as the principal means of control. It is argued that the appropriate objective for situations such as these is the maximization of either undiscounted earnings over the planning horizon or total value of the investments at the horizon. When either objective function is used in conjunction with the frequently encountered linear programming models for the capital rationing problem, shadow prices result which give rise to discount rates that will reproduce the optimal solution using discounted cash flow as a criterion. These results are then used as a means for clarifying several confusing and misleading statements that have appeared in the literature.     

On the functional form of corporate cooptation: Empirical findings linking the intensity of market constraint with the frequency of directorate ties

Using data on market transactions involving manufacturing industries in the 1967 American economy and data on directors of large firms involved in manufacturing at the time, the frequency of interorganizational ties through corporate directorates operating in economic sectors J and M is shown to increase with the extent to which average profits in industry J are constrained by its market transactions (sales and/or purchases) with sector M. Market constraint has its strongest and most direct effect on the spread of a corporation through ownership ties into multiple sectors rather than on the corporation's use of interlocking. However, the central point demonstrated concerns directorate tie frequency. Not only is the absence of directorate ties predicted by the absence of market constraint, the actual frequency of ties between economic sectors is predicted by the intensity of market constraint they constitute for one another's profits.     

Some roots of preference: Roles,activities and familial values

This paper examines some of the connecting links between modernization in a developing society, particularly urbanization and increased education for women, and preferences for number of children. Using 1973 Taiwan data, preferences for smaller families are found to be consistently related to modern attitudes and behavior in the three domains examined: intrafamilial husband-wife role relationships, extrafamilial activities of the wife, and familial and religious values relating the family to the larger institutional setting. Modernization of these attitudes, behaviors, and values has an impact on reproductive goals independent of their association with structural variables. The wife's outside activities and exposure to modern influences through the mass media are especially important linkages, having a particularly strong mediating effect in the education effect on preferences. Intrafamilial relations appear to be of less importance. Modernization of familial and religious values mediates between urbanization and family size preferences. The measure of preference used is a scale value which has been found in other research to be more predictive of reproductive behavior than the conventional single-valued statement of number of children wanted. As the level of contraceptive use rises in developing societies, family size preferences increasingly become a factor in birth rates, and understanding the sources of change in these preferences takes on added importance. The policy implications of these findings are discussed.     

Approximation of power in multivariate analysis

We consider the calculation of power functions in classical multivariate analysis. In this context, power can be expressed in terms of tail probabilities of certain noncentral distributions. The necessary noncentral distribution theory was developed between the 1940s and 1970s by a number of authors. However, tractable methods for calculating the relevant probabilities have been lacking. In this paper we present simple yet extremely accurate saddlepoint approximations to power functions associated with the following classical test statistics: the likelihood ratio statistic for testing the general linear hypothesis in MANOVA; the likelihood ratio statistic for testing block independence; and Bartlett's modified likelihood ratio statistic for testing equality of covariance matrices.     

Incorporating quality into data envelopment analysis of nursing home performance: A case study

When using data envelopment analysis (DEA) as a benchmarking technique for nursing homes, it is essential to include measures of the quality of care. We survey applications where quality has been incorporated into DEA models and consider the concerns that arise when the results show that quality measures have been effectively ignored. Three modeling techniques are identified that address these concerns. Each of these techniques requires some input from management as to the proper emphasis to be placed on the quality aspect of performance. We report the results of a case study in which we apply these techniques to a DEA model of nursing home performance. We examine in depth not only the resulting efficiency scores, but also the benchmark sets and the weights given to the input and output measures. We find that two of the techniques are effective in insuring that DEA results discriminate between high and low quality performance.