FINANCIAL AND OPERATING RISK ANALYSIS OF TWO ROMANIAN-HUNGARIAN BORDER COUNTIES

The study analyzes the risk of companies selected from two Romanian-Hungarian border counties (Bihor and Hajdú-Bihar counties) by the degree of operational and financial leverage ratios. A total of 1,674 companies from the two counties were included in the analysis, in approximately half and half proportions. In the study, operating, financial and combined leverage ratios are used for risk analysis. Because of the large variance of the ratios, outliers were filtered out. The filtering was based on the degree of the combined leverage ratio, which resulted in 107 companies excluded. In the analysis of sectors, there are significant differences in DOL ratio values between counties. For the DFL indicator, the values are much more balanced. There are also larger differences for DCL, which are likely to be caused by DOL values. The analysis showed no statistically significant difference in leverage ratios between the total county data or the sector-disaggregated county data. The analysis also suggested that some accounting reports may contain manipulations but that further investigations are needed to substantiate them adequately.

Busy Boards, Firm Performance and Operating Risk

Using a sample of listed firms in Malaysia, Philippines, Singapore and Thailand, this article examines the association between busy board of directors and firm performance. We offer three results. First, we find that firm performance (measured by operating profitability and market-to-book equity) is negatively associated with busy boards. Second, we find that firms with busy boards have higher operating risk (measured by volatility of return on assets, volatility of stock returns and volatility of operating cash flow). Third, we find that the association between firm performance and busy boards is conditional on the firm’s life cycle stage. For firms in the growth stage, busy boards are beneficial to firm performance suggesting that the experience knowledge and reputation accumulated with multiple directorships help busy directors to more effectively advise these firms. In contrast, for firms in the maturity stage of their life cycle, busy boards are detrimental to firm performance suggesting the monitoring role of board is weakened by multiple directorships.

The Effects of Healthcare Payment Systems on Skilled Nursing Facilities' Cost Structure and Human Resource Strategies

We examine whether skilled nursing facilities' (SNFs') cost structures vary based on their Medicaid payment systems: fixed-price (FXP) or cost-plus (C+). FXP systems - which tie payments to patient conditions, rather than costs - increase SNFs' operating risk by decreasing the association between revenues and costs. Results suggest that cost elasticities are greater in SNFs that operate primarily under FXP, with weaker results in non-profit SNFs compared with for-profit SNFs. We conclude that SNFs' cost structures are managed in part based on the operating risk resulting from their payment systems. We also find that, under FXP, managers of for-profit SNFs introduce more variable costs into their cost structures by deploying more contract labor. Finally, we show that greater use of contract labor by for-profit SNFs in FXP settings is concentrated below the registered nurse skill level. For non-profit SNFs, we find no differences in contract labor across payment types.