TWENTY YEARS OF INTERNATIONAL DIVERSIFICATION FROM A GERMAN PERSPECTIVE
Wolfgang Gerke/Ferdinand Mager/Alexander Röhrs
We examine the potential benefits of international portfolio diversification over the last two decades from an ex-post and ex-ante German investor's perspective. We explicitly consider the effect of a German home bias. Our analysis shows that international diversification is highly desirable, but practical implementation of unrestricted historically based portfolio weightings is limited due to selectivity risk. The results of ex-post rolling-window analyses show that a home bias of 20% up to 40% is a suitable domestic equity investment range for German investors, who currently implement this percentage. We also find that the ex-post minimum variance portfolios perform well in an out-of-sample analysis. They outperform the benchmark indexes and a sole domestic investment.
pp. 86 - 102
VALUATION OF CUSTOMERS IN GROWTH COMPANIES - A SCENARIO BASED MODEL
Manfred Krafft/Markus Rudolf/Elisabeth Rudolf-Sipötz
In this paper, we evaluate growth stocks by modeling a company's customer equity. We start with the observation that the number of customers in successful start-ups increases very quickly (exponentially) in the first few years. Then the customer base converges towards an industry average. On the other hand, the number of clients in poorly performing start-ups rapidly declines until bankruptcy occurs. These observations imply a "bathtub" shape to the probability distribution for the number of customers in the initial years, i.e., low probabilities for the number of clients close to average but high probabilities for extreme realizations. The valuation procedure we present here is based on a binomial scenario tree technique for the number of clients and the cash flow generated by each client. We show that the model can explain higher company values than can traditional net present value calculations. Furthermore, and in contrast to traditional valuation models, increasing the volatility in the change of the number of customers increases the value of each customer.
pp. 103 - 127
COST ACCOUNTING IMPLICATIONS OF SURGICAL LEARNING IN THE DRG ERA - DATA EVIDENCE FROM A GERMAN HOSPITAL
Christian Ernst/Andrea Szczesny
On January 1st 2004, Germany introduced a prospective payment system for the reimbursement of almost all inpatient hospital cases. The new system, which is based on Diagnosis Related Groups (DRGs), is now mandatory for all hospitals that treat patients insured under Germany's statutory health insurance system (GKV). Although most German hospitals are currently exerting great efforts to calculate their individual DRG-costs, concerns have been raised whether such a system of administered fixed prices will be able to cope with medical innovation or quickly become obsolete. To gain insights into this question, an analysis of the dynamic properties of medical process innovations and their possible impact on the DRG system which is based on actual German data seems clearly merited. For two important medical innovations of the last two decades, a new method of knee replacement surgery and minimally invasive gall bladder removal (laparoscopic cholecystectomy), we empirically explore the question of whether the important cost driver "procedure time" displays a learning effect that accords with classical learning curve theory. Our principal results suggest that for these two high-cost, high-volume procedures, individual and organizational learning does indeed take place in the operating room. Based on these empirical results, we discuss our findings' implications for hospital cost accounting in the era of DRGs.
pp. 127 - 166
PRECISION IN U-TYPE AND J-TYPE TOURNAMENTS
Anja Schöttner
In this paper I contrast the impact of precision, i.e., the level of accuracy with which workers' performance is assessed, on wage costs in U- and J-type tournaments. In U-type tournaments prizes are fixed. In J-type tournaments only an overall wage sum is specified. The principal can increase precision by including more signals in performance measurement. Doing so leads to stronger incentives in U-type tournaments, but not in J-type tournaments. The principal strictly prefers a U-type tournament if workers receive a rent under limited liability and the costs of increasing precision are low. However, if workers are inequity-averse and have unlimited liability, the J-type tournament leads to lower wage costs.
pp. 167 - 192
