Disappointment and the Optimal Insurance Contract

This paper studies the optimal insurance contract under disappointment theory. We show that, when the individuals anticipate disappointment, there are two types of optimal insurance contract. The first type contains a deductible and a coinsurance above the deductible. We find that zero marginal cost is just a sufficient but not a necessary condition for a zero deductible. The second type has no deductible and the optimal insurance starts with full coverage for small losses and includes a coinsurance above an upper value of the full coverage.     

A two-stage fuzzy-AHP model for risk assessment of implementing green initiatives in the fashion supply chain

Green or environmental concerns are drawing more and more attention both in academia and industry. Careful deployment of green initiatives or policies could not only fulfil the requirements of environmental legislation but also lead to a competitive advantage for firms. Nevertheless, making optimal decisions in this regard is not easy. This is principally due to two reasons: (1) the qualitative nature of, and (2) the uncertainty associated with, the parameters involved in the decision-making process. Analytic hierarchy process could be a useful tool to tackle the first challenge because of its ability to handle both qualitative and quantitative variables (decision criteria). Unfortunately, this approach is inadequate at addressing the uncertainties common in real-life applications. This challenge is particularly noticeable in the fashion industry since demand is very volatile, and there are many uncertain variables associated with the whole supply chain. As a result, this paper blends fuzzy logic, which is a popular method of incorporating uncertain parameters into the decision-making process, with analytic hierarchy process to form a selection (decision-making) model for different green initiatives in the fashion industry. The rationale behind the model is to analyse the associated risk of different alternatives, subject to different factors, be they deterministic or not. A numerical example is included in this paper to demonstrate how the proposed model works.     

Precautionary Effort: A New Look

While the concept of precautionary saving is well documented, that of precautionary effort has received relatively limited attention. In this note, we set up a two period model in order to analyze the conditions under which the introduction (or deterioration) of an independent background risk increases effort.     

Stock options and managerial incentives for risk taking: Evidence from FAS 123R

We provide new evidence on the relation between option-based compensation and risk-taking behavior by exploiting the change in the accounting treatment of stock options following the adoption of FAS 123R in 2005. The implementation of FAS 123R represents an exogenous change in the accounting benefits of stock options that has no effect on the economic costs and benefits of options for providing managerial incentives. Our results do not support the view that the convexity inherent in option-based compensation is used to reduce risk-related agency problems between managers and shareholders. We show that all firms dramatically reduce their usage of stock options (convexity) after the adoption of FAS 123R and that the decline in option use is strongly associated with a proxy for accounting costs. Little evidence exists that the decline in option usage following the accounting change results in less risky investment and financial policies.     

Differences Across Originators in CMBS Loan Underwriting

There is considerable heterogeneity in the organizational structures of CMBS loan originators that may influence originators’ underwriting incentives. We examine data on over 30,000 commercial mortgages securitized into CMBS since 1999, and find significant differences in the propensity to become delinquent depending upon whether a loan was originated by a commercial bank, investment bank, insurance company, finance company, conduit lender, or foreign-owned entity. These differences hold both before and after controlling for key loan characteristics. We then explore possible explanations for these results. Reliance on external financing during a loan’s warehousing period—the period between origination and securitization—could explain the relatively poor performance of loans originated by conduit lenders. Also, despite the potential for engaging in adverse selection, balance-sheet lenders—commercial banks, insurance companies and finance companies—actually underwrote higher-quality loans.     

The relationship between competition and business segment reporting decisions under the management approach of IAS 14 Revised

This research addresses the relationship between industry competition and managers’ choice regarding whether to separately disclose a business segment following the adoption of International Accounting Standard 14 Revised (IAS 14R) and the management approach to segment determination. Logistic regression reveals a significant negative relationship between disclosure and company returns in excess of the industry average.Prior research indicated a significant relationship between disclosure and abnormal returns under the industry approach to segmentation. Our results provide evidence that this flexibility persists as managers maintain their ability to aggregate segments to protect excess returns under IAS 14R and the management approach. Our findings are timely as the IASB plans to modify its segment reporting requirements as part of the Board's convergence agenda and as thousands of companies worldwide, effective from 2005 onward, are now preparing financial statements using IFRS.     

An analysis of the value of cash flow statements of New Zealand pension schemes

Superannuation (pension, retirement) schemes (plans) are required to report their earnings on a fair-value basis, reflecting recent shifts toward fair-value reporting in financial reporting. Fair-value earnings of such schemes include realised earnings and unrealised changes in values of assets and liabilities (unrealised earnings). This study examines the relation between components of fair-value earnings (realised and unrealised) and cash flows of 161 New Zealand defined benefit schemes for the financial year 1998. The findings of the study include that realised earnings are negatively associated with unrealised earnings and positively associated with cash flows from operations, but no association is found between unrealised earnings and cash flows from operations. This suggests that fair-value reporting has reduced the informational disparity between realised earnings and operating cash flows and therefore the reporting of cash flows information may not provide users with different information from reported in realised earnings. However, the results suggest that unrealised earnings provide additional information to users.     

Size of employment unit and injury rates in British manufacturing: a secondary analysis of WIRS 1990 data

This article uses unique information provided by the WIRS 1990 dataset in order to explore the relation between size and industrial injury in British manufacturing industry. Results are reported for both independent establishments and for those which form part of larger organisations. The examination of the relation between the injury rate and other variables is permitted by use of a regression model.     

A market test of investor reaction to disagreements

The SEC currently requires that firms disclose recent disagreements with their auditors over accounting or auditing matters when a change in auditor is reported. The effectiveness and usefulness of requirements to disclose disagreements have been questioned, and previous empirical research on the issue has been inconclusive. This study investigates the information content of disclosure of the auditor-firm disagreements. The analysis indicates a significant negative market reaction in the week that the Form 8-K is filed with the SEC. This finding is consistent with the position that the disclosure provides information useful to investors.     

ARMANI 2004/05秋冬趋势

ARMANI集团是全球现今主导时尚和高级消费品的集团之一,1975年7月24日成立于米兰,GIORGIO ARMANI是现任主席兼行政总裁及唯一股东.该集团现拥有十三间厂房,雇员人数达四千七百名,生产的时尚产品包括服装、配饰、眼镜、手表、首饰、家居用品、香水及化妆品.旗下品牌除了主线的GIORGIO ARMANI、副线有适合一般场合穿着的ARMANI COLLEZIONI、以合纤面料为特色的MANI、便装及运动衫系列的EMPORIO ARMANI、牛仔系列的A/J ARMANI JEANS、以街头化和多元化为特征的A/XARMANI EXCHANGE、ARMANI JUNIOR童装系列和ARMANI CASA家居系列.