THE IMPLICATIONS OF DISTRESS PREDICTION MODELS FOR CORPORATE LENDING

Three literatures on financial distress prediction are reviewed and evaluated in terms of their usefulness in credit analysis. These are (1) bankruptcy prediction models initiated by Altman, (2) behavioural studies of the ability of loan officers and others to make accurate predictions of bankruptcy and (3) attempts to simulate loan officers' judgements. It is concluded that techniques based on judgement simulation are likely to be the most effective decision aids.     

Accounting Information and Joint Arrangements

The accounting profession has recently issued a standard (AAS19) on production sharing agreements and has signalled impending regulation of accounting for other types of joint arrangements. Here we discuss the nature of joint arrangements and the role that accounting information plays in causing such arrangements to exist, determining their legal form, safeguarding the interests of the contracting parties, and protecting other interested parties likely to be disaffected by the arrangement.     

Short-run Returns around the Trades of Corporate Insiders on the London Stock Exchange

Previous work examined the long-run profitability of strategies mimicking the trades company directors in the shares of their own company, as a way of testing for market efficiency. The current paper examines patterns in abnormal returns in the days around these trades on the London Stock Exchange.
We find movements in returns that are consistent with directors engaging in short-term market timing. We also report that some types of trades have superior predictive content over future returns. In particular, medium-sized trades are more informative for short-term returns than large ones, consistent with Barclay and Warner's (1993) 'stealth trading' hypothesis whereby informed traders avoid trading in blocks.
Another contribution of this study is to properly adjust the abnormal return estimates for microstructure (spread) transactions costs using daily bid-ask spread data. On a net basis, we find that abnormal returns all but disappear.     

Accountability,maps and inter-generational equity: evaluating the Nigerian oil spill monitor

The Oil Spill Monitor (OSM) is an innovative public sector accounting system intended to improve the regulation of oil pollution in the Niger Delta through greater transparency and stakeholders’ engagement. The Nigerian OSM, an online accounting and geographic information system, was set up by non-governmental organizations before becoming part of the regulator’s accountability system. Problems with data quality, regulatory enforcement and remediating practices meant that improved accountability and stakeholder engagement were necessary but not sufficient in this case.     

Calculating the equity cost of capital using the APT: the impact of the ERM

One of the expected benefits of membership of the Exchange Rate Mechanism (ERM) was a reduction in risk which should lead to a lower cost of capital and foster investment and growth. Using the APT, we investigate the behavior of the equity market risk premium for the London Stock Exchange prior to and during sterling's membership of the ERM. We find that prior to and during the first year of membership the equity market risk premium fell quite dramatically. However, when conflict between domestic and ERM policy requirements arose at the turn of 1991, the equity risk premium increased and continued to do so until sterling's exit, partially wiping out the benefits of membership of the ERM.     

Fair trade certification as oversight: an analysis of fair trade international and the small producers' symbol

In this article we analyse Fair Trade as a form of non-state regulation, building on the literature on the internal politics and governance of Fair Trade International (FTI) certification. We focus on recent developments in the FTI certification system, including the split of Fair Trade USA from FTI and the emergence of the Small Producer's Symbol (SPP) as an alternative to FTI certification. We highlight the role of the three regional Producer Networks, in particular the Latin American Producer Network, the CLAC, in the politics and governance of the FTI system. In order to analyse these issues we employ an alternative reading of Karl Polanyi's work in relation to Fair Trade. We problematise the claim made by some in the literature that FTI certification is an example of Polanyi's concept of re-embedding. Instead, we draw on Polanyi's concept of oversight to analyse Fair Trade certification. We argue that the emergence of the SPP out of the CLAC shows promise for being a mechanism of oversight more reflective of Polanyian re-embedding than FTI certification. We also emphasise how the growth of the SPP and the pressure from the Producer Networks have prompted governance reform within the FTI system.