Making Mountains of Debt Out of Molehills: The Pro-Cyclical Implications of Tax and Expenditure Limitations

This paper presents evidence that property tax limits have detrimental effects on state and local revenues during recessions. Property tax limits cause states to rely on income–elastic revenue sources, such as the income tax or charges and fees. Greater reliance on these revenue sources results in greater revenue declines during economic downturns. We present analysis of time–series, cross–sectional data for the U.S. states for each of these conclusions. Our results suggest that states would have fewer and more modest financial problems during economic downturns if they did not enact property tax limitations

ABSTRACTS, PAPERS PRESENTED, ANNUAL MEETING, SAEA, TULSA, OKLAHOMA, FEBRUARY 1993

Teaching/Communication/Extension/Profession,

DEVELOPMENT OF A STOCHASTIC MODEL TO EVALUATE PLANT GROWERS' ENTERPRISE BUDGETS

Increased domestic concentration and international competition in the floricultural industry are forcing growers to improve resource management efficiency. Cost management and cost accounting methods are becoming key tools as growers attempt to reduce costs. These tools allow growers to allocate costs for each crop, increasing their greenhouse planning abilities. Growers have a relative high degree of risk due to potential crop and market failure. Individual growers have different tolerance for risk and risk bearing capacity. Growers need a cost accounting system that incorporates production and market risk, a system that allows them to make informed business decisions. The research reported in this paper developed a greenhouse budgeting model that incorporated risk to allow growers to compare production costs for flowers with different genetics and production technologies. This enables greenhouse growers to make production management decisions that incorporate production and market risk. The model gives growers the option of imputing their own production data to evaluate how various yield and price assumptions influence income and expense projections, and ultimately, profit. The model allows growers to compare total production cost and revenue varying grower type, production time, geographical location, operation size, and cost structure. The model evaluates budgets for growers who market to mass-market retail operations or wholesale intermediaries who sell to merchandisers or flower shops distribution channels. The model was demonstrated with sample data to illustrate how incorporating risk analysis into a grower's greenhouse budget model effects resource allocation and production decisions as compare to a budget model that does not incorporate risk. Deterministic and stochastic models were used to demonstrate differences in production decisions under various assumptions. The stochastic model introduced prices and flowering characteristics variability. The @Risk software was used to generate the random number simulation of the stochastic model, and stochastic dominance analysis was used to rank the alternatives. The result for both the deterministic and stochastic models identified the same cultivar as most profitable. However, there were differences in crop profits levels and rankings for subsequent cultivars that could influence growers' production choice decisions. The grower's risk aversion level influenced his/her choice of the most profitable cultivars in the stochastic model. The model summarizes the sources of variability that affect cost and revenue. The model enables the grower to measure effects that change in productivity might have on profit. Growers can identify items in their budget that have a greater effect on profitability, and make adjustments. The model can be used to allocate cost across activities, so the grower would be able to measure the economic impact of an item on the budget.Crop Production/Industries,

Management issues in systems engineering

When applied to a system, the doctrine of successive refinement is a divide-and-conquer strategy. Complex systems are sucessively divided into pieces that are less complex, until they are simple enough to be conquered. This decomposition results in several structures for describing the product system and the producing system. These structures play important roles in systems engineering and project management. Many of the remaining sections in this chapter are devoted to describing some of these key structures. Structures that describe the product system include, but are not limited to, the requirements tree, system architecture and certain symbolic information such as system drawings, schematics, and data bases. The structures that describe the producing system include the project's work breakdown, schedules, cost accounts and organization

Does Firm-specific Information in Stock Prices Guide Capital Allocation?

We show that firms in industries in which firm-specific stock price variation is larger use more external financing and allocate capital with greater precision in the sense that their marginal q ratios are closer to one. According to the Efficient Markets Hypothesis, greater firm-specific stock price variation reflects higher intensity firm-specific information capitalization in stock prices. We propose that higher firm-specific price variation may be an indicator of greater functional-form market efficiency in the sense of Tobin (1982).

Capital Budgeting Methods and Performance of Water Services Boards in Kenya

One management practice that has been widely adopted by corporations is capital budgeting. The current study sought to establish the relationship between capital budgeting methods and performance of water services boards in Kenya. The study was guided by the following specific objectives: to identify the capital budgeting techniques employed by the Water Services Boards in Kenya; to assess the factors that influence the choice of the capital budgeting techniques used by the Water Services Boards in Kenya; and to evaluate the relationship between capital budgeting techniques and organizational performance. A review of literature related to the study area was undertaken in order to eliminate duplication of what has been done and provide a clear understanding of existing knowledge base in the problem area. The literature review is based on authoritative, recent, and original sources such as journals, books, thesis and dissertations. A descriptive design was to identity the relationship between capital budgeting techniques and performance in water services boards in Kenya, whose number stood at 8 as at June 2008. A semi-structured questionnaire was used to collect primary data from the respondents. Since all the Water Boards have websites and reliable internet connection, the researcher sent the questionnaires to the respondents outside Nairobi by email. The Boards whose Head offices are located in Nairobi received their questionnaires by hand delivery. A letter of introduction, stating the purpose of the study was attached to each questionnaire. In addition, the researcher made telephone calls to the respective respondents to further explain the purpose of the study and set a time frame for the completion of the questionnaires. Once completed, the researcher personally collected the questionnaires from respondents in Nairobi, while those from outside Nairobi were received online. Findings of the study indicate that the capital budgeting techniques used by Water Services Boards in Kenya include Net Present Value, Internal Rate of Return, Profitability Index, Average Rate of Return and Payback Period. The findings further show that the Factors that Influence the choice of capital budgeting techniques include: - Cost of debt to the Water Service Board, either from public or private sources; Internal Rate of Return; Average cost of capital for its stakeholders; Average rate of return on equity invested by the Water Services Boards; and Risk associated with the project. The findings also point at a positive relationship between usage of capital budgeting techniques and organizational performance. Improved access to funding to undertake projects and informed decision making were cited by the respondents as being the major benefits of adoption of capital budgeting techniques. Keywords: Capital Budgeting, Performance, Water Services Board

New Directions in Compensation Research: Synergies, Risk, and Survival

We describe and use two theoretical frameworks, the resource-based view of the firm and institutional theory, as lenses for examining three promising areas of compensation research. First, we examine the nature of the relationship between pay and effectiveness. Does pay typically have a main effect or, instead, does the relationship depend on other human resource activities and organization characteristics? If the latter is true, then there are synergies between pay and these other factors and thus, conclusions drawn from main effects models may be misleading. Second, we discuss a relatively neglected issue in pay research, the concept of risk as it applies to investments in pay programs. Although firms and researchers tend to focus on expected returns from compensation interventions, analysis of the risk, or variability, associated with these returns may be essential for effective decision-making. Finally ,pay program survival, which has been virtually ignored in systematic pay research, is investigated. Survival appears to have important consequences for estimating pay plan risk and returns, and is also integral to the discussion of pay synergies. Based upon our two theoretical frameworks, we suggest specific research directions for pay program synergies, risk, and survival