March 2007
  In this issue

Benton: Financial health of America's hospitals in
critical condition in evolving health-care economy

Kimmel explores new models for studying interest rates

Global Supply Chain Forum to reach six continents in 2007

Accounting study: Impact of SOX reforms foreshadowed by 1992 FDIC act outcomes

Hills finds technology gap between U.S., Namibian college students shrinking

Max M. Fisher College of Business > The Ohio State University Fisher College of Business
Benton: Financial health of America's hospitals in
critical condition in evolving health-care economy

W.C. Benton's research suggests that the current business model of hospitals is flawed and it could have drastic effects on the uninsured, poor and immigrant populations.

With a newly published purchasing textbook and an endowed professorship in management, W.C. Benton at first glance might appear to be a classic business scholar.

Yet, he demonstrates concern for the plight of uninsured populations and his research in health-care management cuts across many disciplines. It delves into federal and state policy, bio-health and life sciences and social issues such as providing medical care for the unemployed and poor.

“It’s an exciting area to work in,” said Benton, who was named the Edwin D. Dodd Professor of Management last November. “It’s overwhelming too.”

Hospitals, pharmaceutical companies, government agencies, physician partnerships, insurance companies and group purchasing organizations are a sampling of organizations that Benton examines in his research. Read More»

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Kimmel explores new models
for studying interest rates

Bob Kimmel
Formerly a Princeton economics professor and a researcher at the university’s Bendheim Center for Finance, Bob Kimmel left behind an institution that boasts influential economists tapped for high ranking federal posts and Nobel Prize winning scholars.

Yet Kimmel, an expert in econometrics and financial analysis, feels at home with his Fisher colleagues in the finance department. He is finding that a business school is a better setting for his research.

Kimmel’s research focuses on mathematic models used by Wall Street and academic researchers to track and test interest rate behavior. “The modern school of thought on interest rate modeling began in the 1970s and 80s,” he said. “In the 1990s, the affine yield models came into prominence and have been widely used.” However, many now argue that these models have systematic problems in capturing real world interest rate behavior. Kimmel’s work is dedicated to finding better alternatives.
The finance professor shared with Knowledge Link the latest developments in his studies. Read More »

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Global Supply Chain Forum to
reach six continents in 2007

Douglas Lambert, director of the Global Supply Chain Forum, with the help of Fisher researchers and forum members, will hold week-long courses on supply chain management on six continents this year.

Douglas Lambert, director of the Global Supply Chain Forum, is on a quest to make sure everyone in the corporate world realizes that supply chain management involves every function in the organization.

With the help of Fisher researchers and top corporate executives, Lambert, the Raymond E. Mason Chair in Transportation and Logistics, is leading a global charge to implement a model that stresses relationship management and the implementation of eight cross-functional business processes.

Last year, the forum, through Fisher’s Executive Education program, made its international debut with week-long seminars in England and Argentina. Yet, Lambert said 2007 is the year his strategy will truly go worldwide. Beginning this year, the forum will reach every continent except Antarctica. It will expand onto the campuses of universities in China, Taiwan, Australia, New Zealand and South Africa.

The forum’s strategy presents supply chain management as a relationship managing tool that links teams from corporations that do business with one another. The week-long, open-enrollment sessions are taught by Fisher researchers. The programs are designed by the researchers based on a book that represents the combined knowledge of forum members and the research team. Read More »

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Accounting study: Impact of SOX reforms foreshadowed by 1992 FDIC act outcomes

Research by Anne Beatty, the Deloitte & Touche Chair in Accounting and Jennifer Altamuro, an assistant professor in accounting, shows the Sarbanes-Oxley act is likely to have the same results as the 1992 Federal Depository Insurance Corporation improvement act.

A comprehensive study of the Federal Depository Insurance Corporation (FDIC) Improvement Act of 1992 (FDICIA) in the banking industry provides strong indication that similar internal control reforms under Sarbanes-Oxley are likely to be effective, according to research conducted by Fisher accounting professors.

“The potential effectiveness of Sarbanes-Oxley (SOX) internal controls reforms in improving the quality of earnings reports are of great interest and importance to regulators, practitioners and academics,” said Jennifer Altamuro, an assistant professor in accounting and co-author of the study. “However, a short time horizon since implementation and confounding macroeconomic events during the SOX implementation period make the impact of SOX reforms on earnings quality difficult to discern.”

In the paper “Do Internal Control Reforms Improve Earnings Quality,”Anne Beatty, the Deloitte & Touche Chair in Accounting, and Altamuro, addresses the question of whether changes in internal control monitoring for United States banks led to improvements in earnings quality. The paper examines characteristics of earnings among banking industry firms, using both accounting and market-based measures.

Beatty’s and Altamuro’s results suggest that FDICIA-mandated internal control reforms led to improvements in each of these earnings characteristics for banks affected by the regulation, relative to banks that were not required to adopt FDICIA-reforms during the same time period. The authors reported that “affected firms showed significant increases in earning persistence, ability to predict cash flows and a stronger relationship between earnings and returns in the post-FDICIA period.” Read More »

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Hills finds technology gap between U.S., Namibian college students shrinking

Professor Stephen Hills meets students, who are heading home, at the Namibia-Zambia border crossing.

When Fisher Professor Stephen Hills arrived in Namibia to spend a year as a Fulbright scholar, one of the most striking things he discovered was the use of new technology by students who couldn’t afford to purchase textbooks for his class.

With textbooks largely unavailable because of slow shipments or high prices, students at the University of Namibia often utilized USB flash drives to download Hills’ lecture notes from his personal laptop computer.

Hills, associate professor of management and human resources and academic director of the Center for International Business Education and Research, taught international business and labor relations courses at the university in the African country. Although Namibia might be classified as a developing country, Hills said the innovative use of technologies such as cell phones and flash drives can help accelerate the economic growth of the nation.

Innovative use of products has the potential to make an impact in developed countries, which could narrow the divide between rich and poor nations, Hills said. The mass produced, cheaper information technologies are transforming businesses in poor countries in vastly different ways than in the United States. Read More»

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News Briefs
Rudi Fahlenbrach, assistant professor of finance, was quoted in numerous national publications in response to Michael Dell’s return as CEO of Dell Computers.

Fahlenbrach spoke on his research regarding boomerang CEOs with The Wall Street Journal, The New York Times, USA Today, Forbes, CNBC and the Dallas Morning News.

Andrew Karolyi, the Charles R. Webb Designated Professor of Finance, was quoted in the Feb. 8 edition of TIME Magazine on the outlook of American markets for new initial public offerings from foreign corporations.

Karolyi told the magazine that U.S. stock markets can still attract more money and investors because of the strict rules and scrutiny corporations must comply with to be listed.

J. Richard Dietrich, chair of the Accounting and MIS program, was quoted in a Feb. 2 The New York Times article on the valuation of stock options.

Dietrich told the paper that auctions of the options could be problematic and produce low values, but have the potential to attract more customers.

Anthony Sanders, professor of finance, was quoted in a Feb. 12 Bloomberg wire story on Merrill Lynch’s effort to capture a dominant share of trading in bonds backed by home loans.

Sanders told the news service that this is the best time to get into the housing market to become a big moneymaker when the housing market rebounds.

Steve Mangum, senior associate dean, was quoted in a Jan. 25 BusinessWeek article on tactics lawmakers could use to help small businesses deal with a minimum wage hike.

Mangum told the publication lawmakers should bundle a federal minimum wage increase with a stronger Earned Income Tax Credit.

Karen Hopper Wruck, associate dean for MBA programs, was quoted in a Jan. 27 The Wall Street Journal article on the relationship between the ouster of a CEO and stock market gains.

Wruck told the paper that a company’s stock could rise due to unanticipated factors in the market rather than a new CEO.

Oded Shenkar, Ford Motor Company Chair in Global Business Management, was quoted in a March 1 Los Angeles Times article on the impact of Chinese investor’s on American financial markets.

Shenkar told the paper that investors in the U.S. and other countries should prepare themselves to better read and respond to wild, unpredictable swings of the Communist country's stock market.

Fisher Working Paper Series

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