Cost variance, Cost control, Capital investment decision

Internal Control, 17th century

To assure that the commercial banking industry's performance serves the “convenience and needs” of the public, bank supervisory authorities have been vested with broad powers to alter the competitive environment in bank markets. While several criteria have been used to evaluate the effects of entry, merger, branching, and other changes in the allocation of bank resources, the results have been largely inconclusive. Since the regulatory authorities have pursued somewhat conflicting objectives in seeking a “failure-proof” system that is also “efficient, ” there may be no single criterion for evaluation of bank behavior that is wholly consistent with the behavior predicted by the neoclassical theory of the firm.

A perfect capital market is a key assumption in recent theories of security pricing. It is assumed that the costs of transactions, information-gathering, and portfolio management are all zero, and that no investor is so large as to exert an appreciable effect on either the risk-free interest rate or the yield on risky securities. If, in this perfect capital market, investors have identical decision horizons and homogeneous expectations, then there is a unique optimal portfolio of risky securities. Since this unique portfolio must include every security in proportion to its relative valuation in the capital market, it is referred to as the “market” portfolio. When the capital market reaches equilibrium, the expected return of every security will be a linear function of the expected return of the market portfolio. From this relationship Lintner and Mossin have separately derived valuation formulas that express the market price of a security as a function of the security[s end-of-period expected value, its risk as measured by the variance and covariances of this end-of-period value, the market price of risk within the portfolio, and the risk-free rate of interest.

Depreciation, Replacement costs, Cost of Capital, Inflation

I. Introduction, 712. — II. The deterministic model, 712. — III. The stochastic model, 714.

Business and accounting education were obviously affected by a myriad of events and insights during the 1960's. Among them were the increasing pace of economic, technological, social, and political changes, the more explicit recognizing of education as being a lifelong process, and the mounting importance of the not-for-profit sector in the economy of the U.S. The impact of quantitative methods, behavioral sciences, and computers had been felt in teaching and research by all the traditional fields in business schools. Curricula had veered away from description and procedure and toward analysis and decision making. Above all, there was an interdisciplinary and integrating tendency in many business schools. The interdisciplinary thrust was felt most forcefully in the doctoral programs. They began to produce a new breed of faculty with broader and more rigorous educations and an ability and desire to apply new research techniques to the traditional business fields. In turn, the masters' and bachelors' programs were just beginning to be influenced by these fresh approaches.

The article presents a short-run planning model for a decentralized firm, which includes a linear programming model for the allocation of scarce corporate resources. The decentralization philosophy is well known and its essence lies in the desire by large firms to delegate responsibility decision making on a broad basis throughout the organization. A classical decentralization problem occurs in the planning phase of a decentralized organization. It consists of the question of how to obtain an optimal plan for the firm as a whole while allowing each division to do its own planning. An important limitation to the decomposition technique is that only problems of a certain form can be subjected to the technique. The decentralization model presented has the general form required for the application of the decomposition technique. The "market" values are, in mathematical programming terminology, the dual values on scarce corporate resources. This description essentially applies to all applications of the decomposition methodology to the decentralized decision making problem.

Journal Article A Maximum Sustainable Growth Rate for British Industrial Outputs Get access T. S. Barker T. S. Barker University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 38, Issue 3, July 1971, Pages 369–376, https://doi.org/10.2307/2296389 Published: 01 July 1971