The no-arbitrage condition and financial markets with heterogeneous information

This paper examines the role of the no-arbitrage condition in financial markets with heterogeneous expectations. We consider a single-period, state-contingent claims model, withM risky securities andS states. There exist two types of heterogeneously informed investors, where the information heterogeneity is defined with respect to either the security payoff matrix, the state probability vector, or state partitions. When the information heterogeneity is defined with respect to either the security payoff matrix or state partitions, the no-arbitrage condition imposes a constraint on the dispersion of information between informed and uninformed investors. Further, the no-arbitrage condition is useful in ascertaining the patterns of heterogeneity among investors that are consistent with equilibrium. However, when the information heterogeneity is defined with respect to state probabilities, the role of the no-arbitrage condition is severely restricted. Finally, the no-arbitrage condition may have important implications for the (necessary and sufficient) conditions for the existence of an equilibrium price vector in financial markets with heterogeneous expectations.     

The Effective Duration and Convexity of Liabilities for Property-Liability Insurers Under Stochastic Interest Rates

Managing interest rate risk for property-liability insurers requires appropriate measurement of the sensitivity of liabilities to movements in interest rates. Most prior studies have assumed that interest rates shift in a parallel fashion and that the cash flows from liabilities are unaffected by interest rate changes. This article recognizes that unpaid property-liability (P-L) insurance losses are inflation-sensitive, that movements in interest rates will affect future claim payouts due to the correlation between interest rates and inflation and that interest rates are stochastic. The effective duration and convexity of P-L insurance liabilities calculated based on this approach are substantially lower than those measured using traditional approaches, which has important implications for asset-liability management by P-L insurers.     

On building better construct measures: Implications of a general hierarchical model

Four problems occur in the scale development process: (a) defining the construct, (b) drawing items from multiple domains, (c) identifying dimensions, and (d) showing nomological validity. In order to minimize these problems, the authors propose a general hierarchical model (GHM) that provides an organizational structure for placing many of the individual difference constructs used in marketing and consumer behavior. Three principles, which were derived from the GHM, add to the current scale development paradigm: (a) Define and test the construct within a hierarchical network that includes antecedents and consequences, (b) define and test the construct's dimensionality, and (c) match the construct's items to its level in the hierarchical system. By using these steps in scale development, researchers can build more precise measures possessing higher levels of validity and reliability. © 2008 Wiley Periodicals, Inc.     

Hospitality studies and hospitality management: A symbiotic relationship

The key contribution of this paper is to critically analyse advances made since the introduction of hospitality as a higher education subject, to capture contemporary thinking, and to support the recognition of the intellectual benefits for hospitality management theory and practices of a curriculum informed from a social science-based studies perspective. The benefits of this inter-relationship are demonstrated through the inclusion of an illustration informed by historical means of enquiry, which applies hermeneutical analysis and interpretation of St. Benedict's Rule (c. 530 A.D.). This serves to tangibly demonstrate the academic rigour, value, and educational gains achievable through a symbiotic relationship between hospitality studies and hospitality management.     

Taxation and top incomes in Canada

We estimate the elasticity of reported income with respect to tax rates for high earners using sub‐national variation across Canadian provinces. We argue this allows for better identification of tax elasticities than the existing literature. We find that elasticities of reported income at the provincial level are large for incomes in the top 1%, but small for lower earners. There are strong indications that the response happens both through earned and capital income. While our estimated elasticities are large, changes in tax rates cannot explain much of the overall long‐run trend of higher income concentration in Canada.     

Developing and Measuring the Impact of an Accounting Ethics Course that is Based on the Moral Philosophy of Adam Smith

Accounting ethics failures have seized headlines and cost investors billions of dollars. Improvement of the ethical reasoning and behavior of accountants has become a key concern for the accounting profession and for higher education in accounting. Researchers have asked a number of questions, including what type of accounting ethics education intervention would be most effective for accounting students. Some researchers have proposed virtue ethics as an appropriate moral framework for accounting. This research tested whether Smithian virtue ethics training, based on Adam Smith’s “The Theory of Moral Sentiments” (1790/1976), is effective in improving accounting student’s cognitive moral development (CMD). This research used a pre-test, treatment, post-test, quasi-experimental design utilizing the Defining Issues Test 2 (DIT-2) instrument to measure students’ CMD. Analysis of DIT-2 gain scores did show a significant improvement in subjects’ personal interest scores and a significant improvement in an overall measure of CMD, the DIT N2 index, whereas their DIT-2 post-conventional scores did not improve significantly. This research supports the proposition that the concepts contained in Smithian virtue ethics can contribute to an effective accounting ethics education intervention. However, further research is required to determine what concepts should be included to improve accounting students’ post-conventional moral reasoning.     

Micromultinationals: Some Preliminary Evidence on an Emergent ‘Star’ of the International Entrepreneurship Field

This paper provides some preliminary evidence on the behaviour of the micromultinational, an emergent player in the international entrepreneurship field. Using survey data from the Scottish Council for Development and Industry, it found that mMNEs originate from a mixture of high and low technology sectors and employ Foreign Direct Investment as well as international contractual approaches in servicing their foreign target markets. It also concluded that micromultinationals overseas market selection decisions were mainly influenced by market- and knowledge-seeking factors rather than considerations of psychic proximity. The implications of these summary findings for policy, theory and future research are discussed in the paper.     

Games Students Play: Incorporating the Prisoner's Dilemma in Teaching Business Ethics

The so-called "Prisoner's Dilemma" is often referred to in business ethics, but probably not well understood. This article has three parts: (1) I claim that models derived from game theory are significant in the field for discussions of prudential ethics and the practical decisions managers make; (2) I discuss using them as a practical pedagogical exercise and some of the lessons generated; (3) more speculatively, I suggest that they are useful in discussions of corporate personhood.     

Potential Growth of the US Economy: Will the Productivity Resurgence Continue?

This paper analyzes the sources of U.S. productivity growth through 2004 and presents medium-term projections for the U.S. economy. We attribute a substantial portion of productivity gains over the past decade to production and use of information technology equipment and software. In the most recent years, we also identify a growing contribution from sources outside the technology- producing sectors. Our base-case projection for the GDP growth rate is almost exactly three percent. We emphasize the substantial range of uncertainty by presenting an optimistic projection of 3.5 percent and a pessimistic projection of only 1.9 percent. JEL Classification D240,E230