Information,Asset Prices,and the Volume of Trade

A dynamic equilibrium model is constructed in which agents with access to different information sets participate in the capital market. Agents must use the equilibrium price of capital to make optimal forecasts of the return to holding capital. Examples show that the volume of trade, as well as the price of capital, can be highly correlated with a measure of the information content of prices. This measure of information is the difference between the unconditional entropy of the dividend and the entropy of the dividend conditional on observing the price of capital.     

INVERSE RELATIONSHIP BETWEEN PRODUCTIVITY AND FARM SIZE: THE CASE OF CHINA

In developing agricultures, past research has suggested an inverse relationship between farm productivity and size. The raw data from China show such an inverse relationship. However, the inverse relationship disappears after we instrument for land area using the fact that one of the objectives of the land allocation process in rural China is to ensure local households to meet their nutritional needs. The empirical inverse relationship is likely due to the failure to account for the unobserved land quality that is unevenly distributed across the farm size continuum, rather than inherent to China's agriculture. (JEL O13, Q12, Q15)     

Stock Price Volatility,Ordinary Dividends,and Other Cash Flows to Shareholders

This paper shows that the results of variance-bound tests depend on how cash distributions to shareholders are measured. As in prior studies, we find apparent evidence of excess volatility when a narrow definition of cash flow (dividends only) is applied. However, we are unable to reject the hypothesis of market efficiency when the cash flow measure also includes share repurchases and takeover distributions in addition to ordinary cash dividends.     

Disentangling the Differences between Abusive and Predatory Lending: Professionals’ Perspectives

This study describes how mortgage professionals differentiate abusive from predatory lending. Data were analyzed qualitatively. The results indicate that some users of this term do not always adhere to a strict definition of predatory lending but rather use it as a term for any general mortgage abuse and mortgage fraud. Existing laws at the federal‐ and state‐level curtail abusive lending and promote fairness in the market place and they are highly enforced among depository financial institutions. However, unregulated nonfinancial institutions, mortgage brokers, and originators are still a primary source of predatory lending.     

AN ASSESSMENT OF FASHION AWARENESS OF FEMALES BASED ON SELECTED DEMOGRAPHIC FACTORS

A sample of 252 females was queried to determine the differences in fashion awareness. The study aimed to assess the fashion awareness of females as affected by the city of residence, by their reference to different selected fashion magazines, and the extent of fashion awareness existing among women based on the following variables: age, marital status, education, number of dependent children in the family, income, and courses taken relating to fashion. The study determined that fashion awareness of the participants was affected by fashion reading media, age, marital status, education, income, and courses taken relating to fashion. Fashion awareness was not affected by city size or number of dependent children in the family.     

What Affects Individuals' Decisions to Acquire Forecasted Information?*

Abstract. Individuals may acquire forecasted information because forecasters (e.g., analysts) possess superior information, superior forecasting abilities, or both. We conduct a series of experimental sessions to investigate individuals' information acquisition decisions. In our experimental setting, individuals are able to acquire unprocessed information (which is analogous to that used by analysts), processed information (which is analogous to that produced by analysts), or both. We examine the effects of forecast bias and economic stability on the type of information acquired. Our results suggest that individuals are less inclined to acquire unprocessed information as economic stability decreases. Under conditions of economic instability, they are more inclined to acquire processed information, and processed and unprocessed information combined. Forecast bias, on the other hand, does not affect individuals' information acquisition decisions. Individuals appear to recognize the optimism contained in biased forecasts and attempt to adjust for such biases. Our results also suggest that individuals can more effectively use processed information than unprocessed information, regardless of the degree of forecast bias. Our overall findings suggest that individuals acquire forecasts because forecasters are perceived to have superior (processing) abilities. Lastly, our results suggest that in using information individuals are prone to make pessimistic predictions. Résumé. Les particuliers ont accès à de l'information prévisionnelle grâce aux prévisionnistes (les analystes, par exemple) qui possédent de l'information de qualité supérieure, des capacités prévisionnelles plus grandes ou les deux. Les auteurs ont procédé à une série de séances expérimentales visant à étudier les décisions d'acquisition d'information des particuliers. Selon le plan d'expérience de l'étude, les particuliers ont la possibilité d'acquérir de l'information non traitée (analogue à celle qu'utilisent les analystes), de l'information traitée (analogue à celle que produisent les analystes) ou les deux. Les auteurs étudient les conséquences des distorsions prévisionnelles et de la stabilité économique sur la nature de l'information acquise. Les résultats obtenus donnent à penser que les particuliers sont moins enclins à acquérir de l'information non traitée lorsque la stabilité économique s'effrite. En situation d'instabilité économique, ils sont davantage enclins à acquérir de l'information traitée et une combinaison d'information traitée et non traitée. La distorsion prévisionnelle, d'autre part, n'a pas d'incidence sur les décisions d'acquisition d'information des particuliers. Ces derniers semblent déceler l'optimisme que contiennent les prévisions affectées par la distorsion et tentent d'ajuster leur interprétation pour tenir compte de cette distorsion. Les constatations des auteurs laissent également supposer que les particuliers peuvent utiliser à meilleur escient l'information traitée que l'information non traitée, peu importe le degré de distorsion prévisionnelle. Dans l'ensemble, leurs conclusions suggèrent que les particuliers font l'acquisition d'information prévisionnelle parce qu'ils considèrent que les prévisionnistes possèdent des compétences (celles de traiter l'information) supérieures aux leurs. En dernier lieu, les résultats obtenus par les auteurs révèlent que les particuliers, lorsqu'ils utilisent l'information qu'ils ont acquise, ont tendance à formuler des prévisions pessimistes.     

Asset Accumulation In Early Married Life

This longitudinal study of the factors influencing the accumulation of financial assets by young married couples in three metropolitan areas of Illinois, finds that couples that start out with a strong financial base tend to improve their relative financial position over time. Especially intriguing is the finding that those couples that acquired initially substantial amounts of debt were more likely to be well off financially at a later time, possibly because the principal asset purchased with these debts, own home, appreciated substantially during the period studied. The results also suggest that a measure of normal income becomes relevant to explaining variations in asset accumulation only after five or six years of the marriage, while socioeconomic variables other than income seemed to have relatively little effect on changes in asset holdings over time.