Search results

Some members of Congress in the USA have expressed serious concern that endowment spending rates of major American universities are too low. The purpose of this paper is to derive optimal spending rates and compare them with actual rates to determine if this concern is warranted.

A Cobb‐Douglas utility function is used to represent the trade‐off between current spending and endowment (which allows more future spending). Maximization of this function subject to relevant constraints yields a formula for the optimal endowment spending rate, which takes the form of a difference equation. The steady‐state solution to this difference equation is explored, along with the nature of convergence to the steady‐state. Relevant data are obtained from American universities with endowments over $500 million in 2007 to determine the optimal spending rates implied by the theory. These optimal rates are then compared with actual average spending rates.

Actual average spending rates are just below 5 per cent, which is well below the optimal rates of 7‐8 per cent implied by the theory.

The results provide some support for regulations mandating minimum average spending rates from university endowments over time.

This paper is the first to model this problem using a theoretical framework that closely parallels the actual trade‐off considered by university investment managers, and it is the first to compare actual and theoretically optimal rates of endowment spending.

In recent years, economics has turned its serious attention to the explaining of conflicts and a peaceful resolution of conflicts. Some interesting and powerful microeconomic models have been developed, yet it seems there are gaps that motivate the current research. As our discussion shows below, the existing models are robust in explaining an equilibrium defence spending of a nation in a general equilibrium setting. Yet, there is little that we know about the regional distribution of defence spending that is likely to give rise to serious rent-seeking activities, politicking and consequent economic consequences in terms of regional disparity and inequality. In this work, we posit that defence spending is like a local public good that impacts on a regional, or local, economy. To be more specific, our model suggests that defence spending offers public infrastructure to a regional economy that, in turn, impinges on the costs of production of local firms, which thereby influence the competitive positioning of the regional economy in the national, or global, market. The goal of the work is to explore how the politics of allocation of defence spending can create an equilibrium regional inequality within a nation, which may in turn drive internal conflicts. Since an allocation of defence spending impacts on regional inequality, regional inequality becomes endogenous in our model. We establish an equilibrium inequality in our model that depends on the optimal allocation of defence spending across regions, which is driven by the electoral motive of an incumbent government.

This paper tests for a positive, a negative and a nonlinear relationship between the share of ownership controlled by firm managers and the management decision to invest in research and development (R&D). Likewise, it examines whether or not institutional investors induce corporate managers with ownership stakes to spend on R&D.

It examines a sample of the United Kingdom (UK) Financial Times Stock Exchange (FTSE) all-shares firms over a longitudinal period from 2009 to 2018. The R&D is measured by the natural logarithm of a firm's R&D spending and a firm's R&D expenditure scaled by its total assets at the end of the year. The results are estimated using the year/industry fixed effects as well as the firm fixed effects.

The results show a positive effect on R&D spending at a lower level of managerial ownership, and a negative impact at a higher managerial ownership level. The findings jointly suggest an inverse U-shaped nonlinear relationship between ownership by firm managers and management decisions on R&D spending. The results also demonstrate that the effect of institutional investors' ownership on R&D spending decisions is observable only at a lower level of managerial ownership and disappears at a higher level.

The results shed the light on the role of managerial ownership in promoting firm innovation. They suggest an optimal level of equity ownership by corporate managers that maximizes R&D spending, implying that firms can effectively manage their R&D spending by restructuring their managerial ownership to maintain an appropriate level of managerial ownership to align managerial interests with shareholder interests by either increasing it to the optimal level or decreasing it when it becomes above this level. The findings also support the limited degree of monitoring and the long-term perspective offered by institutional investors in the UK

The study provides new evidence on the non-monotonic effect of the share of ownership controlled by firm managers on R&D spending decisions. It also expands the growing body of literature and contributes to the debate on the effectiveness of institutional investors in the UK.

The purpose of this study is to measure the impact of technology spend on bank profitability focusing on Indian public and private sector commercial banks. The study also assesses the longevity duration of impact for both public and private sector banks. The trade-off is created between the bank’s profitability and technology spent across four identified columns: increase product sales, reduce cost, enhance employee efficiency and optimally use existing resources.

The metrics of four columns converted to measurable 11 financial alarming indicators and impact is again checked on profitability indicator ROE. The data used for empirical analysis for the study are between the year 2003 and 2019, across 12 public and 15 private banks. The interface between technology spend and profitability is measured using panel vector autoregression (VAR) and panel vector error correction model (VECM) and further the link between 11 financial indicators and profitability measures is established using panel data analysis.

The study found that there is a mixed effect of technology spent on profitability and performance of Indian banks, where public sector banks were found to be more unstructured over private sector banks. The study advises the optimal technology spend strategies to gain enhanced productivity for banking business which are to name a few – planned technology reserves, customer awareness campaigns for products, robust employee-customer motivation policy and customized technologies aligned to existing infrastructure.

The data was original and extracted from the Reserve bank of India website and respective banks’ annual reports.

Based on a continuous version of the Lanchester advertising model for a duopoly, a mathematical model is developed to determine the optimal advertising policy of a firm responding to the advertising pulsation policy of its competitor. A Dynamic Programming (DP) approach has been employed to arrive at the optimal solution.

It has been mainly demonstrated that under a concave or linear advertising response function, the focal firm's DP policy is superior to its Uniform Advertising Policy (UAP) counterpart (constant advertising spending over time), irrespective of the advertising pulsation policy employed by its rival. Under a convex advertising response function, on the other hand, the focal firm's DP policy is superior to its Advertising/Maintenance Pulsing Policy (APMP) and Advertising Pulsing Policy (APP) counterparts (alternating advertising spending at two levels), irrespective of the advertising pulsation policy used by the competitor.

The purpose of this paper is to propose a conceptual approach to determining an optimal strategy development process and controlling of the defence spending, by utilizing the decision‐making system adopted in the Republic of Estonia.

The author offers a part of the Balanced Scorecard model named “Management and Control Perspective” as one of the improvement tools for the system of planning military expenditures and effective utilization of budgetary funds.

The results show that the Balanced Scorecard application, using the “utility function”, will allow the Estonian Defence Forces to overcome important barriers to strategy implementation by interrelation of military planning and budgeting processes.

One suggestion for further research might be established as a way of improvement and development of methods directed to application of the utility function in the decision‐making process. This approach will improve calculations of strategic perspective plans and will reveal the essence of the budgetary policy on the whole by taking into consideration expenses features of the business and non‐profit organizations.

By using the Balanced Scorecard the paper offers a new strategic method of planning and controlling the military expenditure in the Estonian Defence Forces.

The present paper provides direct evidence of the alternative methods forecast measures and the possibility of using mathematical models in the strategic planning process.

Rob Griffin, senior vice president and U.S. director of search for Media Contacts, a communications consulting firm, is faced with the task of optimizing search engine marketing (SEM) for Air France. At the time of the case, SEM had become an advertising phenomenon, with North American advertisers spending $9.4 billion in the SEM channel, up 62% from 2005. Moving forward, Griffin wants to ensure that the team keeps its leading edge and delivers the results Air France requires for optimal Internet sales growth. The case centers upon Air France's and Media Contacts' efforts to find the ideal SEM campaign to provide an optimal amount of ticket sales in response to advertising dollars spent. This optimal search marketing campaign is based on choosing effective allocation of ad dollars across the various search engines, as well as selecting appropriate keywords and bid strategies for placement on the search result page for Internet users.

In determining the optimal strategy, the case presents background information on the airline industry as well as the Internet search options available at the time, including Google, Microsoft MSN, Yahoo!, and Kayak. Additionally, background information is provided on SEM and its associated costs and means of measuring the successfulness of each marketing effort. The case illustrates how one must first determine the key performance indicators for the project to guide analysis and enable comparison of various SEM campaigns. Cost per click and probability to produce a sale differ among publishers. Therefore, using a portfolio application model's quadrant positions can be used to determine optimal publisher strategies. Additionally, pivot tables help illustrate campaigns and strategies that have historically been most successful in meeting Air France's target Internet sales. Multiple recommendations on how Media Contacts can assist Air France in improving its SEM strategy can be derived from the data provided.

Students learn how to optimally leverage the Internet in generating customer sales in a cost-effective manner. Students will analyze and manipulate a variety of data using pivot tables to determine optimal strategies for obtaining maximum total online bookings through the various online channels available. Using a portfolio application model, students can determine an optimal publisher strategy and complete copy improvement analysis.

The construction industry has long been criticized for unethical conduct. The owner usually manages the contractor's opportunistic behaviors by employing a professional supervisor, but there is a risk of covert collusion between the supervisor and contractor. Based on the principal–agent theory and collusion theory, this paper aims to investigate optimal collusion-proof incentive contracts.

This paper presents a game-theoretic framework comprising an owner, supervisor and contractor, who interact and pursue maximized self-profits. Built upon the fixed-price incentive contract, cost-reimbursement contract, and revenue-sharing contract, different collusion-proof incentive contracts are investigated. A real project case is used to validate the developed model and derived results.

This paper shows that the presence of unethical collusion undermines the owner's interests. Especially, the possibility of agent collusion may induce the owner to abandon extracting quality information from the supervisor. Furthermore, information asymmetry significantly affects the construction contract selection, and the application conditions for different incentive contracts are provided.

This study still has some limitations that deserve further exploration. First, this study explores contractor–supervisor collusion but ignores the possibility of the supervisor abusing authority to extort the contractor. Second, to focus on collusion, this paper ignores the supervision costs. What's the optimal supervision effort that the owner should induce the supervisor to exert? Finally, this paper assumes that the colluders involved always keep their promises. However, what if the colluders may break their promises?

Several collusion-proof incentive contracts are explored in a project management setting. The proposed incentive contracts can provide the project owner with effective and practical tools to inhibit covert collusion in construction management and thus safeguard construction project quality.

This study expands the organization collusion theory to the field of construction management and investigates the optimal collusion-proof incentive contracts. In addition, this study is the first to investigate the effects of information asymmetry on contract selection.