The Abuse of the “Confident Consumer” as a Justification for EC Consumer Law

A reference to the need to create confident cross-border consumers who can contribute to the strengthening of the internal market has often been used as one of the main arguments for EC consumer policy and legislation. The argument has been presented in order to justify both the creation of a minimum safety net for consumers (the minimum confidence argument) and the current turn towards more total harmonisation of consumer protection (the harmonised confidence argument). In the paper these lines of argument are critically evaluated with reference to common sense knowledge about the behaviour of consumers as well as on the basis of Eurobarometer data concerning consumer confidence. In this light the substantive minimum harmonisation measures which have been justified with reference to the need for promoting consumer confidence seem only to a limited extent relevant with respect to the creation of such confidence. The current turn towards total harmonisation most certainly cannot be justified in this way. Other substantive measures, facilitating the access to a counterparty, would be more important in order to create consumer confidence in cross-border shopping, but the Community has almost systematically avoided adopting such measures.     

The Falsification of Four Popular Hypotheses About the Asian Crisis

Various claims have been made about the causes of the Asian crisis and its spread. Here, we use data on the behaviour of capital flows during the crisis to test the strong forms of four such hypotheses, that portfolio investors and hedge funds played a dominant role in initiating and/or spreading the crisis; that moral hazard kept efficient markets from predicting the crisis; and, finally, the common lender hypothesis of Kaminsky and Reinhart. In the process we also test implications of the Calvo-Mendoza model of rational investor ignorance. All are falsified as monocausal explanations. For example, portfolio investments that could not have been subject to substantial moral hazard continued to flow into Asia until very shortly before the crisis. Likewise, banks were a much larger source of capital outflows during the crisis than were portfolio investors. While falsified in their strongest forms, several of these hypotheses in less strong forms should play a role in a more nuanced analysis. It is necessary to move past simple single-factor approaches in order to produce a more complete, synthetic explanation of this episode.     

Corporate environmental policy and abnormal stock price returns: An empirical investigation

This paper examines the correlation between the excess stock market returns and the adoption of an environmental protocol by companies. The underlying hypothesis that I test is whether evidence of the adoption of environmental policy, prosecution by an environmental agency or the routinized training of staff in environmental protocols, which proxies for the willingness of managers to invest for the long term, is associated with superior economic returns to shareholders. I find that both the adoption of an environmental policy and prosecution for breach of environment standards have significant explanatory power in an analysis of excess returns. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

A Comparison of Cost of Equity Estimates of Local and Global CAPMs

Cost of equity estimates are compared for three pricing models: the traditional local CAPM, the single (market) factor global CAPM, and the two‐factor global CAPM, with both market and currency index factors. For 2989 US stocks, the average difference in the cost of equity estimates is about 48 basis points between the local CAPM and the single‐factor global CAPM, and is about 61 basis points between the two global models. For 70 developed‐market ADRs, the corresponding average differences are 76 and 47 basis points, respectively. For 48 emerging‐market ADRs, the corresponding average differences are 57 and 70 basis points.     

Analysis of Beef Producers' Risk Management Perceptions and Desire for Further Risk Management Education

Beef cattle producers were surveyed in Texas and Nebraska to investigate perceptions of sources of risk, the effectiveness of risk management strategies, and interest in further risk management education, particularly production risk, using probit analysis. Important decision variables identified are age, prior use of risk management tools, previous attendances of risk management education, and risk aversion. Severe drought and cattle price variability are identified as primary risk factors with potential to affect farm income. Extremely cold weather and disease are of less importance. Understocking pasture and storing hay are perceived most effective as risk management options.