Issue 14 August 2004
In this issue are the following articles:
Timing is all a dynamic view of risk and investment
The orthodox 'static' view of investment decisions suggests that financing constraints always reduce current investment. Glenn Boyle argues that a more complex picture emerges when dynamic factors are taken into account.
The economics and etiquette of tipping
The act of tipping is very much a novelty to most New Zealanders - reserved only for truly exceptional service or the most exclusive restaurants. Yet in the United States tipping is very much a social norm, with tips in US restaurants alone estimated at $USD 26 billion a year (almost a third of New Zealand's GDP). Steen Videbeck's been looking at some of the economic research on tipping.
Author:
Steen Videbeck
Reputation and quality reinterpreting policy instruments for service markets
Analyses of the structure, conduct and performance features of services markets imply that traditional competition-policy instruments inaccurately reflect the degree of competition in these markets - and that more weight should be put on quality and the disciplining effects of non-price competition. ISCR's Annemieke Karel explains why.
Author:
Annemieke Karel
Resolving insolvencies in banking
George G. Kaufman, Professor of Finance and Economics at Chicago's Loyola University, was in New Zealand recently visiting Victoria University of Wellington and the Reserve Bank of New Zealand as Professional Fellow in Monetary and Financial Economics. As a result of his time, he has written a paper entitled 'Banking Regulations and Foreign-Owned Banks' from which this article is drawn.
Author:
George G. Kaufman
Profitable governance for non-profit hospitals
Governance - its structure, design and operation - has received considerable attention in recent years. But this attention focuses almost exclusively on privately owned companies. How do the principles of institutional and governance design differ for state-owned and other non-profit organisations? Bronwyn Howell provides some insight.
Revising the revisionists more on the WACC
In the last issue of Competition & Regulation Times, Glenn Boyle argued that a long-standing consensus over how the cost of capital (WACC) is estimated is unravelling - in particular, that the use of the CAPM is questionable because it ignores unsystematic risks, and that these risks are both relevant and significant in assessing investment projects. In the world according to Boyle, regulators who rely upon the CAPM will underestimate WACC and therefore induce under-investment in the industries that they regulate. But Martin Lally, from Victoria University's School of Economics and Finance, sees some problems in this approach.
Author:
Martin Lally
Investing in shares here, there and everywhere?
A significant proportion of New Zealanders invest in shares, either directly or through a professionally managed fund. And, as taxpayers, all New Zealanders now have at least an indirect exposure to the sharemarket through the recently established New Zealand Superannuation Fund. While most investors agree that there's a case for holding a mix of both New Zealand and foreign shares, there's a considerable disagreement about the right mix. Richard Frogley draws out the issues.
Author:
Richard Frogley
