Analyst Hype in IPOs: Explaining the Popularity of Bookbuilding

The bookbuilding IPO procedure has captured significant marketshare from auction alternatives recently, despite the significantlylower costs related to the auction mechanism. In France, whereboth mechanisms were used in the 1990s, the ostensible advantagesof bookbuilding were advertising-related benefits. Book-builtissues were more likely to be followed and positively recommendedby lead underwriters. Even nonunderwriters' analysts promotebook-built issues more in order to curry favor with the IPOunderwriter for allocations of future deals. Yet we do not observevaluation or post-IPO return differentials that suggest thesetypes of promotion have any value to the issuing firm.     

Auditor Expertise and the Estimation of Dollar Error in Accounts

A major task that auditors undertake in formulating their audit opinion is to estimate the dollar error that might exist in accounts in light of their evaluation of internal control strengths and weaknesses. The research that has been undertaken to evaluate the quality of auditor performance on this task, however, has produced mixed results. The current study tries to overcome some theoretical limitations and measurement limitations that have undermined prior studies. Forty practising auditors rated their abilities on fourteen characteristics derived from a model of expertise. They then undertook an experiment where they judged the extent of dollar error that might exist in the inventories of a manufacturing company. They based their judgments on working papers provided to them that contained, among other information, an evaluation of the company's internal control system. An estimate of the 'true' dollar error in the inventories was calculated using a program that simulated the company's internal control and accounting system. This estimate was then used to calculate the accuracy of the auditors' judgments. Their ratings on the expertise characteristics were not related to their judgment accuracy. Their ratings were related, however, to their confidence in their judgment accuracy. Auditors who considered themselves more expert at the task were more confident in their judgment accuracy but they were, in fact, no more accurate than auditors who considered themselves to be less expert at the task.     

OTC MARKET SWITCHING AND STOCK RETURNS: SOME EMPIRICAL EVIDENCE

In this study the effect on the common stock returns of 278 firms that switched OTC market segments from 1982 to 1987 is examined. It is hypothesized that abnormally positive returns are associated with news of the move from the NASDAQ to the NASDAQ National Market System (NMS) and that the market responds more favorably during pre-NMS inclusion for stocks with low versus high liquidity before switching. Using event study methodology, results support these hypotheses. Unlike post-listing studies, the evidence reveals no anomalous return behavior during the post-NMS inclusion period studied.     

Market Designs for a Completely Renewable Power Sector

The article discusses whether the current German electricity market design is suitable for an electricity system completely based on renewable sources, and analyzes alternatives. Such a system becomes ever more likely due to the phase-out of nuclear power and the carbon reduction targets. Various existing scenarios for a completely renewable electricity system are analyzed and compared with respect to the contribution of different renewable technologies. Challenges for the market design arising from the differences between the current and a completely renewable system are identified??notably problems with cost recovery and investment incentives, an increased need for balancing and/or intraday adjustments, an increased diversity of actors, grid congestion and the continuing occurrence of market power. The current market design??s ability to solve these issues is assessed with the result that all but the critical problem of investment incentives and cost recovery can be solved by adapting certain rules. A?comparison with other suggested market designs reveals that some designs could ensure cost recovery and investment incentives. However, these market designs have other drawbacks. Therefore, the identification of the optimal market design for a completely renewable electricity system requires further research regarding the qualitative and quantitative effects of different changes to the current market design. The article concludes by developing concrete policy recommendations.     

Japan's economic slowdown and its global implications: a review of the economic modelling

Despite its role as a driver of global economic growth through the 1970s, in recent decades the rise of China has seen the international importance of Japan's economic performance recede from the public discourse. This is notwithstanding its continuing key role as economic partner to both industrial and developing countries and changes in its economic performance that would otherwise be a matter for global concern. In particular, the tendency for the Japanese economy and its external trade to stagnate not only has immediate consequences for global performance but also foreshadows a path to industrial transition for other key Asian economies. This paper reviews quantitative studies of Japan's performance. It identifies a paucity of results addressing global implications and suggests new research in this direction.     

Computer knowledge and earnings: evidence for Australia

This paper uses data on wage and salary workers in Australia in 1993 to examine the relation between computer knowledge and earnings. A unique feature of the data set that is used is detailed information on the types and levels of computer skills possessed by individual workers. The main objectives of the study are to contribute to understanding the magnitude and sources of the relation between computer knowledge and earnings. Similar to existing research it is found that there is a large and significant return to computer knowledge, but that the magnitude of the return is substantially reduced in regressions that include detailed occupation controls. Using the detailed information on workers’ computer skills the main finding is that earnings are significantly positively related to the number of types of skills and average level of skills possessed by a worker.     

Risk and the public service manager

The Department of Social Security's discussion document on equalizing state pension age is examined and put in context. The authors conclude that it takes too narrow a view of the equality issue, and argue for a more radical reappraisal of state pension provision for the 21st century.