ANALYST BEHAVIOR SURROUNDING TENDER OFFER ANNOUNCEMENTS

We examine the usefulness and credibility of analyst recommendations by focusing on their behavior surrounding tender offer announcements. For our 1998–2001 sample, we find analysts did not identify takeover targets through their recommendations nor did they distinguish between wealth‐increasing and wealth‐decreasing tender offers. We find some evidence of conflicts of interest in analyst recommendations, but it is confined to the 1999–2000 dot‐com period. However, the long‐run performance following recommendations suggests that these conflicts have little ultimate cost to investors.     

Strong-form efficiency on the Toronto Stock Exchange: An examination of analyst price forecasts*

Abstract. Strong-form efficiency on the Toronto Stock Exchange is examined by focusing on the stock price forecasts of brokerage-firm analysts who follow TSE firms. Two principal analyses are undertaken. First, there is considerable evidence in both the U.S. and U.K. that analysts possess valuable private information at the firm-specific level. This paper provides evidence that this finding is generalizable to Canadian analysts. Second, U.S. and U.K. studies generally have been based on a single-factor model (e.g., the CAPM). The choice of benchmarks (CAPM versus APT) has been shown to be important in a variety of contexts. We provide evidence that the choice of benchmark does not alter the fundamental conclusion that Canadian analysts possess valuable private information at the firm-specific level. Our findings have implications for accounting researchers, namely, the appropriateness of researchers to use CAPM in lieu of the computationally, more burdensome APT and the appropriateness of researchers to use Canadian analyst forecasts when a proxy is required for the (unobservable) market expectation. Résumé. Les auteurs examinent l'efficience « forte » de la Bourse de Toronto, en s'intéressant aux prévisions relatives au prix des actions formulées par les analystes des sociétés de courtage qui suivent les entreprises de la Bourse de Toronto. Deux analyses principales les mènent aux conclusions suivantes. Premièrement, les faits démontrent presque indubitablement que sur le marché des États-Unis aussi bien que sur celui du Royaume-Uni, les analystes possèdent de l'information à caractère privé utile, spécifique à l'entreprise. Les résultats de l'étude démontrent que cette constatation peut être généralisée aux analystes canadiens. Deuxièmement, les études des États-Unis et du Royaume-Uni sont généralement fondées sur un modèle à un seul facteur (le modèle d'équilibre des marchés financiers, par exemple). Il a été établi que le choix des critères (le modèle d'équilibre des marchés financiers ou la théorie de l'établissement des prix par arbitrage) est important dans des circonstances très diverses. Les auteurs démontrent que le choix des critères n'a aucune incidence sur la conclusion fondamentale selon laquelle les analystes canadiens possèdent de l'information à caractère privé utile, spécifique à l'entreprise. Les résultats de leur étude entrainent certaines conséquences pour les chercheurs du domaine de la comptabilité: ils ont avantage à utiliser le modèle d'équilibre des marchés financiers de préférence à la théorie de l'établissement des prix par arbitrage, qui exige davantage de calculs, et à recourir aux prévisions des analystes canadiens lorsqu'il leur faut un substitut aux anticipations du marché (qui ne peuvent étre observées).     

Monopsonistically/monopolistically competitive regional development: Public correction of market outcomes

A model of regional market development is constructed which captures the inefficiencies typical in most of the related literature, and a variety of corrective policy options are explored. For taxes and subsidies, there is no dominant policy with each limited by the zero-profit constraint on entry, informational problems, or adverse distributional considerations. Discriminatory pricing decreases efficiency, but uniform pricing achieves optimal allocations. Public production has certain informational advantages.     

New evidence on the dynamic wage curve for Western Germany: 1980–2004

Blanchflower and Oswald [Blanchflower, David G. and Oswald, Andrew J., 1994a, The Wage Curve, (Cambridge, MA, MIT Press), Blanchflower, David G. and Oswald, Andrew J., 1994b, Estimating a Wage Curve for Britain 1973–90, The Economic Journal 104, 1025–1043. Eine praktische Einführung, Nürnberg] reported that they have found an ‘empirical law of economics’ — the Wage Curve. Our paper reconsiders the western German Wage Curve using disaggregated regional data and is based on almost one million employees drawn from the Federal Employment Services of Germany over the period 1980–2004. We find that the wage equation is highly autoregressive but far from unit root. The unemployment elasticity is significant but relatively small: only between ? 0.02 and ? 0.04. We also check the sensitivity of this elasticity for different population groups (young versus old, men versus women, less educated versus highly educated, German native versus foreigner), confirming that it is stronger the weaker the bargaining power of the particular group.     

On mandatory labeling of animal welfare attributes

This paper assesses US resident support for mandatory labeling of animal welfare information on pork and egg products and outlines policy considerations for assessment prior to implementing any mandatory labeling policies regarding animal welfare practices. Results suggest consumers support mandatory labeling indicating use of gestation crates (stalls) and laying hen cages. Estimates suggest consumers would be willing to pay about 20% higher pork and egg prices to obtain this production practice information. Demographic and latent perception drivers of this support are highlighted. Multiple issues that warrant consideration prior to imposing mandatory labeling are discussed revealing lines of corresponding future research.     

Explaining greater test use for selection: the role of HR professionals in a world of expanding regulation

In recent decades there has been a well‐documented increase in organisations' use of formal tests for selection purposes. This article investigates whether tests' technical qualities and predictive validity are the critical determinants of take‐up, or whether other organisational and contextual factors are more important. Case studies of organisations were used to identify the factors driving change and Workplace Employee Relations Survey data were analysed to determine the consistency of the findings with national data. The single most important factor appears to be the regulatory environment, with tests used as a precautionary measure to protect selection decisions from challenge. The growing formal professionalisation of HR departments is also important, and the influence of both factors is consistent with current theories of organisational decision‐making. Continued growth in test use is likely, but the implications for efficiency in selection are less clear.     

Does the Specialist Matter? Differential Execution Costs and Intersecurity Subsidization on the New York Stock Exchange

This article tests for differences in execution costs among specialist firms for New York Stock Exchange listed securities. Execution cost differences provide a measure of the relative performance of specialist firms. We find a substantial difference in effective spreads and order processing costs across specialist firms, controlling for stock characteristics. While economically significant, the differences in execution costs between specialist firms are much smaller than the cross-market differences reported by Huang and Stoll (1996). Within a specialist firm, there is a positive relation between order processing costs and trading activity that is consistent with the hypothesis that active stocks subsidize inactive stocks.