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Purpose -- This paper aims to offer a succinct description of the Vioxx recall in 2004 and discuss the fundamental reasons why Merck got into this trouble. Design/methodology/approach -- A review of literature has been conducted 'to provide key facts about the Vioxx disaster and to shed light on the operations of its maker Merck. The Vioxx recall case is analyzed from a perspective including both company profits and public interest. Findings -- Merck aggressively marketed an unsafe drug, under the brand name Vioxx, without properly disclosing its serious side effects to consumers. After the facts were revealed, the company faced costly lawsuits, angry investors and falling profits. This case clearly shows holy a disaster can occur when a company becomes greedy and seeks undeserved profits at the expense of ethics and social responsibility. Practical implications -- Building a successful and competitive business requires managers to make decisions that balance profit and social responsibility. When business managers run their business solely for profit, problems will almost certainly occur. Such problems can cause severe damage not only to the company's customers but also to the company itself. Originality/value -- Vioxx is one of the biggest marketing mistakes in recent business history. This paper provides valuable learning insights and should be useful to corporate executives, government regulators and business scholars. [ABSTRACT FROM AUTHOR]

This paper is a financial analysis of several key parameters that affect the cost structure of design firms in the United States. Using results of surveys conducted over the past 15 years, we have examined the cost trends and profitability of design firms. The firms’ profitability is examined as a function of utilization and overhead rate and expense ratio. The impact of overhead caps imposed by public agencies and the reimbursement of CADD costs in public projects on the profitability of design firms are discussed. To evaluate these factors, the paper first discusses in detail the four elements of cost within the design services industry. These four elements are: direct salary costs, indirect salary-related costs, direct nonsalary costs, and general and administrative costs. These design costs are usually summarized and presented as labor, overhead, and direct nonsalary costs. A detailed analysis of the elements that comprise overhead and the key elements that affect overhead are presented. Profitability is then expressed in terms of the factors described, and the effect of overhead caps and nonreimbursement of CADD costs on the firms’ profit is quantified. [ABSTRACT FROM AUTHOR]

Objective: This paper examines the hospital management practices of manipulating financial earnings within the bounds of generally accepted accounting principles (GAAP).Study Design: We conduct regression analyses that relate earnings management to hospital characteristics to assess the economic determinants of hospital earnings management behavior.Method and Data: From the CMS Cost Reports we collected hospital financial data of all U.S. hospitals that request reimbursement from the federal government for treating Medicare patients, and regress discretionary accruals on hospital size, profitability, asset liquidity, operating efficiency, labor cost, and ownership.Results: Hospitals with higher profit margin, current ratio, working capital, days of patient receivables outstanding and total wage are associated with more earnings management, whereas those with larger size and higher debt level, asset turnover, days cash on hand, fixed asset age are associated with lower level of earnings manipulation. Additionally, managers of non-profit hospitals are more likely to undertake some form of window-dressing by manipulating accounting accruals without changing business models or pricing strategies than their public hospital counterparts.Conclusions: We provide direct evidence of the use of discretionary accruals to manage financial earnings among U.S. hospitals and the finding has profound policy implications in terms of assessing the pervasiveness of accounting manipulation and the overall integrity of financial reporting in this very special public and quasi-public service sector. [ABSTRACT FROM AUTHOR]

This paper argues that the fundamental cause of the current economic crisis in the U.S. economy was a significant long-term decline in the rate of profit from the 1950s to the 1970s. Capitalists responded to this profitability crisis by attempting to restore their rate of profit by a variety of strategies, including: wages and benefit cuts, inflation, “speed-up” on the job, and globalization. These strategies have largely restored the rate of profit, but have resulted in stagnant real wages for workers for decades. As a result, household indebtedness has increased to unprecedented levels and must be substantially reduced in order to make possible a sustainable recovery. [ABSTRACT FROM PUBLISHER]

The law of the tendential fall in the rate of profit has been at the center of theoretical and empirical debates within Marxian political economy since the publication of volume III of Capital. An important limitation of this literature is the relative paucity of modern econometric investigations of the behavior of the rate of profit. The central objective of this paper is to remedy this lacuna. We investigate the properties of the profit rate series utilizing the methods of time series econometrics. The evidence suggests that the rate of profit is non-stationary. We also specify a test of Marx’s law of the tendential fall in the rate of profit with a novel econometric model that explicitly accounts for the counter-tendencies and their time series properties. We find weak evidence of a long-run downward trend in the general profit rate for the U.S. economy for the period 1948-2007.JEL Codes: B51, C22, E11. [ABSTRACT FROM PUBLISHER]

Since the end of the nineteenth century and the beginning of the twentieth century big corporations have evolved into one of the main business organizations of the world. Moreover, large corporations started to dominate many industries in the United States (US). Today, in the globalization era, they have become much more powerful as in the past. The US corporations are major players in the business world and influence our lives. The aim of our paper is to analyze the evolution of the first ten largest US corporations by their revenues and profits in the 2011-2012 period. The research type is a literature review. [ABSTRACT FROM AUTHOR]

The literature on investment analysts' forecasts of firms' earnings and their forecast errors is enormous. This paper summarizes the evidence on the distribution of analysts' forecasts and forecast errors using data for all U.S. firms from 1990 to 2004. The evidence indicates substantial asymmetry of earnings, earning forecasts, and forecast errors. There is strong support for average and median earning forecasts being higher than actual earnings a year before the earnings announcement. Such differences between earnings and forecasts also exist across time periods and industries. A month before the earnings announcement, the mean and median differences are small. [ABSTRACT FROM AUTHOR]

Financing technology poses a special challenge to economic institutions for several reasons. First, the uncertainty surrounding all the investment decisions is particularly acute and pervasive in the case of R&D, as well as developing and testing process and product innovation. Second, while the banks appear to have an important role to play, for many types of innovative businesses, they cannot be the sole source of financing. Third, technology ventures appear to face a basic trade off between profit and growth, which may be exacerbated by a difficult relationship with a credit institution. The paper examines these questions both theoretically and empirically, focusing on the US market as the leading financial centre capable of providing imaginative solutions and on the Arab countries as a case study of developing economies facing a financial and institutional constraints. [ABSTRACT FROM AUTHOR]

The present paper attempts a more direct test of the growth and profit maximizing theories of the firm, than previously presented. The approach is to estimate directly the marginal rates of return on investment for individual firms and individual years, over time, for a sample of large U.S. industrial corporations. The marginal rate of return estimates are then statistically compared to several cost of capital series, on a year-by-year basis. Substantial, prolonged, and statistically significant overinvestment is discovered, casting doubt on the profit maximizing conditions but supporting the growth theory of the firm. [ABSTRACT FROM AUTHOR]

Faced with declining economic bases, many non-metropolitan areas find themselves balancing the need to be cost-competitive in terms of lower taxes against the need for provision of valued government services. Using a spatial equilibrium framework, this study econometrically examines the nexus between US state and local fiscal policies and non-metropolitan county growth in earnings and housing rents during the 1990s. The results suggest that state and local fiscal characteristics significantly influenced firm and household location. Some characteristics could be clearly identified as having dominant firm profit effects, while numerous others were identified as having household amenity effects. [ABSTRACT FROM AUTHOR]