THE IMPACT OF STADIUM ANNOUNCEMENTS ON RESIDENTIAL PROPERTY VALUES: EVIDENCE FROM A NATURAL EXPERIMENT IN DALLAS-FORT WORTH

We investigate the impact of a potential new sports venue on residential property values, focusing on the National Football League's Dallas Cowboys' search for a new host city in the Dallas-Fort Worth area. We find that residential property values in the city of Dallas increased following the announcement of a possible new stadium in the city. At the same time, property values fell throughout the rest of Dallas County, which would have paid for the proposed stadium. These patterns reversed when the Dallas stadium proposal was abandoned. Subsequently, a series of announcements regarding a new publicly subsidized stadium in nearby Arlington, Texas, reduced residential property values in Arlington. In aggregate, average property values declined approximately 1.5% relative to the surrounding area before stadium construction commenced. This decline was almost equal to the anticipated household sales tax burden, suggesting that the average expected amenity effect of hosting the Cowboys in Arlington was not significantly different from zero. ( JEL L83, R53, H73)     

Equilibrium Exchange Rate Hedging

We assume a world like the one that gives the capital asset pricing model, but with many goods and many countries. We assume that investors in a given country have homothetic utility functions with the same weights, and a currency that has a sure end-of-period value using a price index with those weights. Siegel's paradox (derived from Jensen's inequality) makes investors want a positive amount of exchange risk. When average risk tolerance is the same across countries, every investor will hold the same mix of market risk (through the world market portfolio of all assets) and exchange risk (in a diversified basket of foreign currencies). In fact, the ratio of exchange risk to market risk is equal to the average investor's risk tolerance. We can write the ratio of exchange risk to market risk (and the fraction of the market's exchange risk that investors hedge) as depending on an average of world market risk premia, an average of world market volatilities, and an average of exchange rate volatilities. The weights in these averages are the same as the weights of the different countries in the currency basket. Given these averages, the ratio (and the fraction hedged) will not depend directly on exchange rate means or covariances. In equilibrium, we can use the ratio of exchange risk to market risk to measure average risk tolerance: in this model, risk tolerance is observable.     

Disagreement and the Cost of Capital

We assess how forms of disagreement among investors affect a firm's cost of capital. Firms experience a lower cost of capital if investors perceive that other investors are ignoring relevant disclosures (perceived errors of omission), but a higher cost of capital if investors perceive that others are responding to irrelevant disclosures (perceived errors of commission). The impact of these two sources of disagreement on the cost of capital is determined by the distribution of opinion and the nature of disclosure. For example, even though aggregated disclosures reveal less to investors, aggregated disclosures may decrease the cost of capital by eliminating disagreement associated with perceived errors of commission. These and additional results arise because the cost of capital is driven not only by investors’ uncertainty about the firm's future earnings performance, but also by investors’ uncertainty about the evolution of beliefs, which partly determines the path of prices.     

Changing risk perceptions and food-handling practices of Oregon household food preparers

Results of 1986 and 1995/6 statewide random surveys were compared to assess changes in the risk perceptions and food-handling practices of Oregon food preparers. The 1986 survey revealed that perishable foods (baked potatoes, hard-boiled eggs, sliced turkey and cream pie) were often held at room temperature for longer than 2–3 h. Those who perceived greater food safety risks were significantly less likely to report temperature abuse of cream pie (P < 0·02) and baked potatoes (P < 0·001). Respondents reported serving raw and/or rare animal products (fish, milk, hamburger and pork) in both surveys. More food preparers perceived that serving undercooked foods was a ‘high’ risk in 1995/6 than in 1986. More (88%) also perceived that serving raw hamburger was a ‘high’ risk in 1995/6 than in 1986 (52%), possibly because of media coverage linking under-cooked hamburgers to the E. coli 0157:H7 outbreak in the Pacific Northwest. Those who perceived a ‘high’ risk were less likely to serve raw fish (P < 0·038) and raw milk (P < 0·002). Significantly more females perceived raw milk to be a ‘high’ risk (P < 0·003). The risks of consuming both raw fish and raw milk were more likely to be underestimated, however. Food safety education is therefore needed to help food preparers to identify ‘high’ risk foods and to motivate them to minimize risks.     

The Effect of Limited Liability on the Market Response to Disclosure*

Abstract. We formalize the effects of an earnings disclosure on security prices under an assumption of limited liability. We derive various nonlinear relations between equity prices and earnings under a variety of capital structure assumptions and. if possible, we tie the relations attained to results from the existing empirical literature. We also characterize how debt prices respond to earnings when holders of debt have limited liability. Finally, we analyze how changes in the degree of leverage and conversion features of debt affect the relation between price and earnings.     

Occupant-use factors influencing optimal results from energy conservation strategies

Although residential conservation strategies can have a dramatic impact on energy consumption, the involvement of the occupant can have a deterring and/or an enhancing influence on optimal results. Occupant impact on the use of residential heating conservation strategies was assessed by monitoring use factors and energy-consumption data of nine families living in an energy test house. The families tested two supplemental space heating strategies, use of a sunspace and a woodstove. The families used each strategy separately for one-week periods. User- and energy-consumption data for the use of flow-restricting showerheads, a hot-water conservation strategy, were used by nine families — seven involved in the testing of the heating strategies and two who tested cooling strategies in the summer months. The families used the showerheads either for a one or two-week period. Energy-consumption data were compared against a baseline week in which none of the conservation strategies were used. A computer-based data acquisition system tracked energy consumption as well as room temperatures and other environmental data. Questionnaires, completed daily and weekly, were used to collect user-behaviour data, including evaluations of user involvement, resulting thermal comfort, and impact on family routines and habits. The results showed that resident implementation of strategy requirements was related to energy savings. Energy savings varied with being at home in order to open/close sunspace doors for optimal heating, with the level of previous experience of the woodstove strategy, and with compensating behaviour such as taking baths instead of using the flow-restricting showerheads.     

What Do Management Earnings Forecasts Convey About the Macroeconomy?

We decompose quantitative management earnings forecasts into macroeconomic and firm‐specific components to determine the extent to which voluntary disclosure provided by management has macroeconomic information content. We provide evidence that the forecasts of bellwether firms, which are defined as firms in which macroeconomic news explains the greatest amount of variation in the forecasts, provide timely information to the market about the macroeconomy when bundled with earnings announcements. Further, we show that bellwether firms provide timely information about both industry‐specific events and broader economic events. Finally, we document that the macroeconomic news in individual forecasts is more pronounced for bad news and point forecasts.     

An Approach to Adjusting Analysts' Consensus Forecasts for Selection Bias*

Many recent empirical studies have concluded that analysts' earnings forecasts are optimistic on average. In this paper, we attempt to undo the effect of one potential source of optimistic bias in analysts' earnings forecasts. Assuming forecasts come from a truncated normal distribution, we estimate the “true” population mean using maximum likelihood. We find that our estimates of earnings are more accurate and less biased than standard measures of sample mean and median. However, we do not find a closer relationship between excess market returns and forecast errors from our maximum likelihood estimate than from the sample mean. This may suggest that the market does not fully incorporate analysts' incentives in generating expectations about future earnings.     

Economic Restructuring and HRM in Hong Kong

This article discusses the human resource implications of' business readjustment and advances in Hong Kong as its economy is restructured into a post-industrial centre of tertiary service industries. Corporate reforms are benchmarked against Western practices of exploring flexibilities and competitiveness which emphasize labour performance and cost savings. However, job security does not appear to have been eroded, possibly betraying an Oriental importance placed upon trust and commitment between employer and employee. As a meeting-place where Eastern and Western cultural practices interface, Hong Kong probably remains economically resilient by keeping its normative and institutional permissiveness in a hybrid mix of Western and Oriental practices.