Board monitoring and covenant restrictiveness in private debt contracts during the global financial crisis

We examine the association between board independence and restrictiveness of covenants in U.S. private debt contracts around the global financial crisis (GFC). We show that board independence is associated with less restrictive covenants suggesting lenders willingness to delegate some monitoring of firms with independent boards. More nuanced analysis between the pre-GFC, GFC and post-GFC periods shows mixed results and we suggest that, during the GFC and its aftermath, lenders place more emphasis on ex ante screening relative to ex post monitoring. We contribute to the literature by providing evidence on covenant use and lenders choices in periods of credit rationing.     

Police pay—contested and contestable

This article provides an analysis of developments in the determination of police pay since 1919. It reveals the contested nature of public sector pay setting where the government of the day pursues short‐term economic goals rather than taking a long‐term approach to staffing issues in essential public services. In the case of the police, the Police Federation of England and Wales (PFEW) has traditionally used both industrial and political methods to put pressure on key government decision makers. Developments reveal increasingly fraught relations between the police and the government, with the 2008 pay dispute in particular marking a new low point. Once it became clear after the 2010 general election that the government would ignore industrial pressure, then the Police Federation of England and Wales felt driven to increase the activities of its political arm. This ultimately backfired with the Plebgate scandal leaving them naked in the negotiating chamber.     

The Effects of Kenya's ‘Smarter’ Input Subsidy Programme on Smallholder Behaviour and Incomes: Do Different Quasi‐experimental Approaches Lead to the Same Conclusions?

Kenya joined the ranks of sub‐Saharan African (SSA) countries implementing targeted input subsidy programmes (ISPs) for inorganic fertiliser and improved seed in 2007 with the establishment of the National Accelerated Agricultural Inputs Access Programme (NAAIAP). Although several features of NAAIAP were ‘smarter’ than other ISPs in the region, some aspects were less ‘smart’. However, the efficacy of the programme, and the relationship between its design and effectiveness, have been little studied. This article uses nationwide survey data to estimate the effects of NAAIAP participation on Kenyan smallholders’ cropping patterns, incomes, and poverty status. Unlike most previous studies of ISPs, a range of panel data‐ and propensity score‐based methods are used to estimate the effects of NAAIAP. The article then compares these estimated effects across estimators and to the effects of other ISPs in SSA, and discusses the likely links between differences in programme designs and impacts. The results are robust to the choice of estimator and suggest that, despite substantial crowding out of commercial fertiliser demand, NAAIAP had sizeable impacts on maize production and poverty severity. NAAIAP's success in targeting resource‐poor farmers and implementation through vouchers redeemable at private agro‐dealer shops likely contributed to its more favorable impacts than those of ISPs in Malawi and Zambia.     

Cognition, Persuasion and Decision Making in Older Consumers

Older adults constitute a rapidly growing demographic segment, but relatively little is known about them within consumer contexts: how they process information, respond to persuasive messages, and make decisions. We discuss extant findings from consumer behavior and related disciplines (e.g., cognitive psychology, neuroscience, social psychology, gerontology) as they pertain to the effects of aging on consumer memory, persuasion and decision The first two authors co-chaired the workshop at the Choice Symposium and made major and equal contributions to this article. The remaining authors were participants in the workshop. They also contributed to this article and are listed in alphabetical order. We wish to thank the editor and Cathy Cole for their helpful comments on the paper. The article, including a more complete list of references, was shortened to meet the page-length constraints of the special issue. The longer version is available upon request from the senior authors.     

The Use and Representational Faithfulness of Graphs in Annual Reports: Australian Evidence

Effective communication of information using graphs depends on the graphs being constructed so that they faithfully represent the underlying data. If certain principles of graphic construction are violated, graphs will be distorted and may mislead users of financial statements. The paper develops and tests hypotheses concerning the relationship between the use and construction of graphs in the annual reports of companies and the performance of those companies.     

An investigation into the measurement of graph distortion in financial reports

The Graph Discrepancy Index (GDI), which originates from the lie factor introduced by Tufte (1983), is the mechanism commonly used in the financial graphics literature to determine whether graphs are distorted and to quantify the extent of such distortion. Although the GDI is critical to the financial graphics literature, little or no attention has been paid to its robustness and accuracy. We critically examine the mathematical characteristics of the GDI and show its limitations as a measure of graph distortion. We review a number of cases to demonstrate these limitations and present an alternative measure of graph distortion—the Relative Graph Discrepancy index (RGD). Numerous simulations suggest that the RGD overcomes the problems associated with the GDI. The RGD is also tested on data presented in earlier research and the results are compared to those obtained using the GDI. In comparison with the GDI, we find that the RGD is more consistent and produces slightly stronger results. We stress, however, that this is not a best or definitive measure but is intended to start a research process that leads to a generally accepted measure.     

Board characteristics and credit‐union performance

We examine the role of board characteristics on the performance of Australian credit unions during the period 2004–2012. Credit unions are unique as they are member‐owned institutions, and their directors are democratically elected by their members – an unusual governance structure that poses challenges for board effectiveness. We find that board remuneration, board expertise and attendance at meetings are associated with increased credit‐union performance and are consistent with the goal of maximising member benefits. While the unique features of credit unions limit the presence of external monitoring mechanisms, we provide evidence that these board characteristics are relevant for credit unions.     

The changed legality of resale price maintenance and pricing implications

From 1911 until 2007, minimum resale price maintenance agreements between manufacturers and resellers were illegal under federal antitrust law. This handicapped manufacturers which sought to exert control over how their products were priced and promoted through the distribution channel. In June 2007, the United States Supreme Court—via the Leegin case—ruled that bilateral minimum resale price maintenance agreements would no longer be automatically illegal. Rather, they would be legal if their net impact is pro-competitive, and illegal only if the net impact is anti-competitive. This ruling empowers manufacturers to use resale price maintenance to create value for their customers and consumers. However, not all stakeholders—including some state legal systems—have embraced the Leegin ruling, thereby creating uncertainty regarding its final impact. Despite this uncertainty, the opportunities created by Leegin are worth exploring and acting upon. Since the Leegin ruling 3 years ago, a new landscape for resale pricing maintenance has been evolving. We discuss this landscape and the considerations for using resale price maintenance within its ambit. For many manufacturers, the chance of benefitting from Leegin outweighs any potential risks.