An Experimental Investigation of Asset Pricing in Segmented Markets

This article reports the results of experimental asset markets in which participants trade two assets with distinct dividend claims. Some traders are able to transact in the markets for both assets, whereas others can trade in only one market. When some are restricted from transacting in one market, the ineligible asset that cannot be traded by all commands a super risk premium. Without this premium, unrestricted investors would not hold all the available shares of the ineligible asset. In addition, we find that although unrestricted traders have the opportunity to remove all risk, few take advantage of this hedging opportunity.     

Jealous Monopolists? British Banks and Responses to the Macmillan Gap during the 1930s

By the end of World War I successive merger waves had producedan oligopolistic, tightly cartelized, English banking system,which was widely viewed as having restricted lending to small-medium-sizedfirms—the famous ‘Macmillan Gap’ in industrialfinance. We explore the reasons behind the failure of marketentry to bridge this gap. The clearing banks are shown to haveacted as ‘jealous monopolists’, obstructing theactivities of the Credit for Industry Ltd (CFI), the only significantfirm established to breach the gap (rather than narrow its upperlimit). By poaching many clients it had vetted and approved,the banks blocked CFI's growth, deterring further market entry,and thus, preserving their monopoly position.     

INCORPORATION OF TAX CONSIDERATIONS INTO THE COMPUTATION OF DURATION

In this paper, the immunization process is extended to protect after-tax income, and the duration indices for after-tax immunization are derived. Selection of the appropriate index depends on individual investor differences in tax regulations. Attention is focused on the mutually exclusive decisions to amortize or not to amortize premia or discounts.     

Black banks: A survey and analysis of the literature

The analysis of the role of black banks in black economic development began in the early 1970s. At that time the focus was on the profitability of these institutions. Since then both the number of black banks and the research on their performance have increased significantly. This article reviews the recent literature on black banks in order to provide a conceptual framework for policies that will promote their growth and prosperity. The authors conclude that there is a clear need for future research in every area relating to black banks.     

Operating leverage,financial leverage,and equity risk

The analysis investigates the combined leverage effect of a fixed capacity decision (fixed cost) plus debt on the risk of equity returns. It is argued that the traditional DOL-DFL calculation is incorrect. A correct calculation is given, using the fact that the capacity decision is endogenous to the firm's decision process. The analysis reveals that the capacity decision partially offsets the effect on equity risk of increasing business risk or debt. However, this ability is lost at high levels of debt.     

An Empirical Examination of the Price-Dividend Relation with Dividend Management

Some recent empirical evidence suggests that stock prices are not properly modeled as the present discounted value of expected dividends. In this paper, we estimate a present value model of stock price that is capable of explaining the observed long-term trends in stock prices. The model recognizes that firm managers control cash dividend payments. The model estimates indicate that stock price movements may be explained by managerial behavior.     

Dual-class versus single-class firms: information asymmetry

I examine information asymmetry in dual-class firms in general and when they need (do not need) additional external capital. In general the results show that dual-class firms have higher information asymmetry than single-class firms. When dual-class firms need additional external financing, the gap in information asymmetry between dual-class firms and single class firms is narrower. I find that as the need of additional external capital increases, the difference in information asymmetry between dual-class and single-class firms decreases (consistent with increased disclosures). It decreases, up to a point that there is no difference in information asymmetry with single-class firms that also needs additional external capital. When using adverse selection component of bid-ask spread, the paper finds that as the need of external financing gets high, dual-class firms show lower information asymmetry 1 year before they need additional external capital.     

Supply-Side Policy and Economic Growth: A Case Study of the UK

Open Economies Review - This paper investigates the potential for a causal relationship between certain supply-side policies and UK output and productivity growth between 1970 and 2009. We outline...