[This article relates the efficiency of nonprofit organizations to the composition of their board of trustees. Following arguments by Fama and Jensen (1983a, 1983b) and Williamson (1983), we conjecture that nonprofit organizations are more efficient if their board of trustees have a larger proportion of outsider trustees rather than insider (employee) trustees since the former are presumed to have a greater incentive to monitor the organization and the latter are presumed to have a greater incentive to consume perquisites. This conjecture is tested empirically for a sample of 72 charities with a specific health focus, with respect to both the technical and allocative efficiency of the organization. Technical efficiency indices were derived by using data envelopment analysis (DEA) under various assumptions concerning the industry production technology, including the assumption that charity outputs are not substitutable for each other. These indices are reasonably well measured since the data included information on volunteer labor, a necessary input for charity services. To test the conjecture that the technical efficiency of the organization is affected by the composition of the board of trustees, the estimated indices of technical efficiency were regressed on the board's proportion of insider trustees and the organization's debt-value ratio. The conjectured relationship was not confirmed by the data. As an additional test, the proportion of insider trustees was replaced by the ratio of insider-trustee remuneration to total labor remuneration, the argument being that the greater the relative remuneration received by the insider trustees, the more capable they might be in appropriating perquisites of all types. As before, the results did not confirm the conjectured relationship, leading us to conclude that the technical efficiency of nonprofits is not affected by the composition of the board of trustees. To determine the relationship, if any, between the allocative efficiency of the organization and the composition of the board of trustees, charity costs were multiplied by the technical efficiency index so that any remaining cost inefficiencies are allocative in nature. This adjusted cost was then regressed on the proportion of insider trustees on the board (or the proportion of insider-trustee remuneration) and the organization's debt-value ratio. The conjectured relationship between allocative efficiency and the composition of the board of trustees was also not confirmed by the data.]

Arthur L. Thomas has argued that financial cost allocations in general and depreciation allocations in particular are arbitrary and incorrigible whenever the firm's revenues are generated by interacting assets. The game-theoretic Shapley technique is applied to the net-revenue-contributions approach to depreciation allocations. The resulting allocations, it is maintained, are non-arbitrary and corrigible if statement users and the accounting profession are willing to accept a constitution of three "reasonable" allocation axioms.

The author investigates the Averch-Johnson-Wellisz hypothesis as it applies to the interstate natural gas transmission industry and analyzes the impact on the industry of rate-of-return regulation. Four optimization models simulate the industry's input-output decisions. The constrained revenue-maximizing model is shown to make the best predictions in comparison with the constrained profit-maximizing (CPM) and profit-maximizing (PM) models. Regulation is shown to have modified industry behavior. The author then analyzes the social-welfare benefits from marginal-cost pricing and finds them to be acceptable. 27 references.

The management accounting and operations management literatures argue that the adoption of advanced manufacturing practices, such as just‐in‐time (JIT), necessitates complementary changes in a firm's management accounting and control systems. This study uses a sample of JIT and non‐JIT plants operating in the Canadian automotive parts manufacturing industry to study the interaction among performance outcomes, intensity of JIT practices, and productivity measurement. This study provides evidence that productivity measurement mediates the relationship between performance outcomes and intensity of JIT practices. Specifically, both JIT and non‐JIT plants that use a broader range of productivity measures are more efficient and profitable than other plants. Also, plants that employ industry‐driven productivity measures are more profitable and efficient than plants that employ idiosyncratic productivity measures, especially if the former are more JIT‐intensive than the latter. Furthermore, plants that employ quality productivity measures are less efficient and less profitable than those that do not, especially if they use more intensive JIT practices. The latter result is consistent with JIT‐intensive plants overinvesting in quality. This study also finds that plants that invest more in buffer stock are less efficient and less profitable, especially if they use more intensive JIT practices. Despite the fact that plant profitability and efficiency are highly correlated, JIT‐intensive plants are more profitable but less efficient than plants that are not JIT‐intensive, after controlling for productivity measures, plant size, and buffer stock. This result suggests that despite wasting resources, JIT‐intensive plants are still able to generate relatively higher profits than plants that are not JIT‐intensive.

This paper models debt renegotiation as a bargaining game between debtholders and shareholder-oriented management, in which management credibly threatens to run down firm assets to force concessions from the creditors. Creditors anticipate this opportunistic behavior by management, creating an upper bound on debt capacity that is less than the value of the firm. If an advantage to debt is introduced, such as favorable tax treatment, an interior optimal capital structure obtains even in the absence of realized bankruptcy costs. Our model also explains variations in debt-equity ratios and the use of certain puzzling debt covenants.

The equilibrium value of a levered firm facing growth opportunities is shown to involve the valuation of a lottery over (cooperative) games rather than a lottery over specific monetary outcomes. In the absence of assumptions about negotiating risk, the value of the firm's claims is seen to be ambiguous even with zero transactions costs. This ambiguity is compounded if the core of the game is empty. This paper rationalizes specific financial instruments and institutions as means for attenuating negotiation costs and core existence problems. Furthermore, the valuation of these instruments requires determining the certainty-equivalent of a lottery over games.