On post-IPO stock price performance: A comparative analysis of RLBOs and IPOs

This is the first study to examine the post-IPO stock price performance by differentiating between IPOs and three types of RLBOs (i.e. public-to-private (or re-IPOs), division-to-private, and private-to-private deals). We document that public-to-private RLBOs outperform their industry rivals, IPOs, mature firms in comparable industries, and a propensity-score matched control group for up to five years post-offering. Further, we document that, within RLBOs, public-to-private RLBOs, outperform private-to-private and division-to-private RLBOs. We also find support for the underwriter signaling effect for public-to-private RLBOs. Our analysis identifies for the first time what private period restructuring activities contribute to superior post-re-IPO stock price performance. Further, the beneficial effects of private period restructurings are enhanced for deals associated with prestigious underwriters. Our findings suggest that first IPOs and re-IPOs differ substantially in term of post-offer performance, the impact of prestigious underwriters on performance, and performance over time.     

Bleached!: Managing coral catastrophe

Corals have recently emerged as both a sign and a measure of the imminent catastrophic future of life on earth and, as such, have become the focus of intense conservation management. Bleached! draws on in-depth interviews and participatory observations with coral scientists and managers to explore the management of the corals’ ecological catastrophe to come. The article starts by describing the unique life of corals, the importance of calculability in catastrophe management, and the coral scientists’ preoccupation with classifying, counting, and seeing in their attempt to comprehensibly monitor corals and anticipate their decline. Algorithmic models and elaborate temporal analyses are central to this governmental project of “knowing bleaching.” What happens after such bleaching events are foreseen is the topic of my next exploration, which highlights the emergence of yet more monitoring as the central coral conservation “action” in the face of the looming catastrophe. The “resilience” concept is of growing importance in the world of coral management. Since it underlines unpredictability and nonlinearity, resilience as well seems to fly in the face of any anticipatory action, instead scientifically justifying forms of inaction. Finally, Bleached! discusses the heated debates among coral scientists about whether to focus present actions on “buying time” for corals, or whether the only way to prevent or limit imminent coral catastrophe is to deal directly with the elephant in the room: the global regulation of climate change. I argue that, in the case of corals at least, scientific knowledge is not power. Quite the contrary, the real political story here seems to lie in the ways in which scientists’ knowledge is neutralized and prevented from having political effects, such that it does not lead to anticipatory action to restore the ecological order. As one of the prominent coral scientists I interviewed for this project put it: current conservation efforts are akin to reorganizing the chairs on the Titanic, rather than to changing the ship’s deadly course.     

A new basis of calculation for collective pensions insurance in Norway

The writing of collective pensions insurance in Norway was first taken up in 1917 by the “Norske Folk”, a life insurance company, founded by the seven oldest Norwegian life insurance companies, and a short time afterwards this kind of insurance was also taken up by the “Norske Forenede”. Finally, in 1931, the “Samvirke” which had been established a short time before by the Norwegian Cooperative Association, began to write collective pensions insurance.     

Zur Verteilung der Abschlusskosten in deutschen Lebensversicherungen

It will be shown that an amortization spread of the acquisition costs to the first N years of a classical german life insurance policy or lifelong annuity always leads to a non negative technical provision at the end of the first year if \( N\,{=}\,5 \) (and the technical provision starting with zero). For usual combinations of the age at entry and the policy duration even \( N\,{=}\,3 \) is sufficient for this purpose. The legal specification given by the new version of VVG in Germany concerning surrender value (i.e. positive value even in case of early lapse) is therefore consistent with the requirement of a amortization spread to 5 years. Additionally a recursion formula for the technical provision with N years spreaded acquisition costs is proven.     

Leibniz’ versicherungswissenschaftliche Schriften aus mathematischer Sicht

Following a short discussion onLeibniz’s view on the injunction of compound interest and his problems with the probability theory, two particularly remarkable examples ofLeibniz’s numerous mathematical investigations are discussed in an actual mathematical diction: first, the present value of an annuity-certain according to his ?regula exactior“, developed correctly without explicitly violating the injunction of compound interest; and second, the present value of a life annuity, which is indeed lacking from a modern point of view: as a present value of a life annuityLeibniz took an annuity-certain with life expectancy.     

Leibniz’ versicherungswissenschaftliche Schriften aus rechtshistorischer Sicht

Leibniz’s works on the mathematics of insurance and finance consist to a great extent of legal-mathematical observations on life annuities in general, pawnshops, insurance and auctions. These legal institutions were mainly developed by late-mediaeval Italian legal practice and legal science and were brought first to the Netherlands and from there to Germany. This article explains whatLeibniz regarded as their legal foundations. The legal rules on interest and compound interest are their common denominator; and these rules, as they existed inLeibniz’ time, were themselves influenced by the Canon-law prohibition of interest, by statutory limitations of interest rates and by a general prohibition of compound interest. InLeibniz’ view, being bound to public welfare, the state has a duty to secure the legal and administrative basis for a functioning practice of insurance, annuities and pawnshops.     

Privatization and globalization: An empirical analysis

This paper examines the link between globalization-measured by foreign direct investment (FDI) and foreign portfolio investment (FPI) – and privatization of state-owned enterprises, in a multi-country sample that focuses on developing countries. We hypothesize that privatization has an effect on FDI/FPI as the process of fostering private sector participation is often accompanied by liberalization reforms, and by allocations of substantial shares of newly privatized firms to foreign investors. Similarly, we expect FDI/FPI to foster privatization efforts as new capital inflows, technology and managerial skills that accompany FDI/FPI make the environment more prone to competition, providing governments with incentives to privatize inefficient firms that need to be turned around. This relation is assessed in two ways, first in a dynamic panel using a generalized method of moments approach, and second through panel causality tests. We find a bi-directional positive relation between privatization proceeds and globalization, particularly in the case of FDI.     

Misadjustment to anticipated shocks: an example of exchange-rate response

A simple model for a small open economy is used to illustrate a distinction between over(under)shooting and what is labeled as misadjusting responses of the exchange rate in this paper. If the relative price elasticity of the aggregate demand, d, is greater than 1, then the exchange rate misadjusts when the time interval between the date when the exchange is anticipated for the first time to the realization of the change is longer than a certain minimum, called the minimum lead time. If d is less than 1, then the exchange rate overshoots with sufficiently long lead time when a shift up of real output is anticipated.     

Attitudes towards the future and their influence on the present

Within the last 15 years a radically different orientation towards the future and its planning has evolved in France. This orientation and its associated attitudes and techniques, collectively termed prospective, have had strong effects on French intellectual and governmental life, most impressively in relation to the fourth and fifth national plans. In England and the USA, virtually nothing is known of prospective or of its founder, Gaston Berger. This article is one of a collection of the principal writings which are to be published in English late this year¹. Writing in 1966 the author compares forecasting and prospective in the light of several years' experience with prospective, and he isolates the effect of “tomorrow's image on today's acts” as a central phenomenon underlying prospective thinking.     

How to make India a knowledge-based society

The National Knowledge Commission set up by the Prime Minister of India, Dr. Manmohan Singh, in 2005 was, perhaps, the first of its kind. One of its three objectives is to make India a knowledge-based society. Among the important areas in the country where problems need to be addressed to achieve the above objective, three—education, knowledge empowerment of Panchayats (the lowest of the three-tier local self-government system in India), and ethical commercialization of the country's creative and cultural tradition—are briefly described in the article. Some steps that need to be taken in each area are stated. For example, in regard to education, we must decommercialize school and higher education, and set up 400,000 high schools in the country where children would receive high-quality free education for 10 years—that is, up to the age of 16. As regards the Panchayats, we need to institute a system so that they are empowered through knowledge in areas of immediate interest to them as well as knowledge that would make them truly informed citizens of the country. In regard to traditional knowledge, it needs to be ensured that the keepers and practitioners of this knowledge are compensated adequately and fairly if such knowledge is commercialized.     

Changing lifestyles and consumption patterns in developing countries: A scenario analysis for China and India

China and India are the world's largest developing economies and also two of the most populous countries. China, which now has more than 1.3 billion people, is expected to grow to more than 1.4 billion by 2050, and India with a population of 1 billion will overtake China to be the most populous country with about 1.6 billion population. These two countries are home to 37% of the world's population today. In addition, China and India have achieved notable success in their economic development characterised by a high rate of gross domestic product (GDP) growth in the last two decades. Together the two countries account already for almost a fifth of world GDP.The most direct and significant result of economic growth in India and China is the amazing improvement in quality of life (or at least spending power) for an increasing share of the population. The populations of both the countries have experienced a transition from ‘poverty’ to ‘adequate food and clothing’; today growing parts of the population are getting closer to ‘well to do lifestyles’. These segments of the society are not satisfied any more with enough food and clothes, but are also eager to obtain a quality life of high nutrient food, comfortable living, health care and other quality services.The theme of this paper is to analyse how the major drivers contributed to the environmental consequences in the past, and to take a forward look at the environmental impacts of these driving forces in China and India. The paper identifies population, affluence and technology to be the major driving forces in environmental pollution for these two countries then applies the simple equation of Impact=Population×Affluence×Technology, or I=PAT to evaluate the effects of changes in these drivers on CO₂ emissions.     

I know where I am going An essay of changing culture and value perspectives

This essay is motivated by concerns about an excessive competitive culture of research assessment in British academia. In Oriental cultures, interests are about the person. So often keenly asked questions are the personal ones such as “Who are you?" and “Where do you come from?" My narrative follows the motto of: via veritas vita, bridging Eastern and Western cultures. It is not evidence-based but is a reflective personal account of a journey of engagement in academic research ethos. The reader will appreciate that the reminiscences and reflections may be nostalgic, at times lamenting, but are invariably anecdotal, subjective and experiential. I can do little more than perhaps hold up a small mirror to reflect upon every-day life and values that puzzled me. The closing reflections show my angst regarding the changing culture, the rule of performance evaluation/rating and the micro-political agenda. I hope that this way of sharing personal experiences/perspectives may be of interest to others.     

On arbitrages arising with honest times

In the context of a general continuous financial market model, we study whether the additional information associated with an honest time τ gives rise to arbitrage profits. By relying on the theory of progressive enlargement of filtrations, we explicitly show that no kind of arbitrage profit can ever be realised strictly before τ, whereas classical arbitrage opportunities can be realised exactly at τ as well as after τ. Moreover, arbitrages of the first kind can only be obtained by starting to trade as soon as τ occurs. We carefully study the behavior of local martingale deflators and consider no-arbitrage-type conditions weaker than no free lunch with vanishing risk.     

Douglasian cultural dialogues and the Financial Reporting Council complexity project

There has been near-universal reliance upon Hofstede's cultural dimensions as the theory base for culturally related accounting research. Given the criticisms that have been raised in respect of Hofstede this paper proposes Mary Douglas's cultural theory as a more appropriate theory base for future research. Central to Douglasian cultural theory is the notion of cultural dialogues which proposes that within any community four solidarities will be present and in constant competition. The paper identifies cultural dialogues through an analysis of comments letters submitted to the Financial Reporting Council (FRC) in response to their ‘complexity of corporate reporting’ discussion paper. To understand how a particular solution has been arrived at when an accounting or auditing issue is reviewed, the debates that precede the outcome need unscrambling by reference to cultural dialogues and the analysis of the comments letters reveals the voices of the different solidarities as they seek to persuade others of the validity of their way of life. The paper proposes a clumsy solutions approach is appropriate for resolving debates on accounting and auditing issues. This approach recognises that, because the solutions offered up by each culture have limitations, all four voices need to be heard in any debate.     

Why is management a cliché?

This article introduces the term demotics of management by asking why so much management literature reads like a cliché. Typically this question has been approached by seeing the cliché as strategic. This article instead views the cliché as symptomatic. It marks a growing problem—how can management track labor out of the workplace and into the realm of social reproduction, a realm that is increasingly, with the tendency of immaterial labor, directly productive. This problem has produced not only the explosion of popular management literature, particularly in the United States, in the last 20 years, but also what might be called a demotics of management. This term may be understood as the proliferation of places where labor-power might be found. But the term also names management’s growing limits when faced with the dispersion and intensification of what Marx called the social individual. Management cannot adequately measure the labor it finds, and therefore must resort to miraculating what it encounters, to use a concept from the collaboration of Gilles Deleuze and Felix Guattari. The crisis of measurement brought on by the growing dominance of what Marx named the General Intellect is a profound challenge not only to management but specifically to its recording-machine, accounting. With the mounting crisis in recording, the very frenzy of popular management discourse reveals more than ever the threat that social reproductive labor already possesses the sociality to value itself differently and independently. The demotics of management thus marks both the proliferation of management in daily life, but also the prior, or what C.L.R. James might have called the completed, organization of immaterial labor that management encounters. Left to repeat what is already completed management can only utter the cliché, however, manically. At the same time, the cliché in management literature does mark the accomplishment of the circuit of exchange value, as it has since Taylor, even as it hints at the possibility of the separation from capital of a mass intellectuality where socialized labor may come to account for itself.     

First-Order Mortality Basis for Life Annuities

Mortality improvements pose a challenge for the life annuity business. For the management of such portfolios, it is important to forecast future mortality rates. Standard models for mortality forecasting assume that the force of mortality at age x in calendar year t is of the form exp, where the dynamics of the time index is described by a random walk with drift. Starting from such a best estimate of future mortality (called second-order mortality basis in actuarial science), the paper explains how to determine a conservative life table serving as first-order mortality basis. The idea is to replace the stochastic projected life table with a deterministic conservative one, and to assume mutual independence for the remaining life times. The paper then studies the distribution of the present value of the payments made to a closed group of annuitants. It turns out that De Pril–Panjer algorithm can be used for that purpose under first-order mortality basis. The connection with ruin probabilities is briefly discussed. An inequality between the distribution of the present value of future annuity payments under first-order and second-order mortality basis is provided, which allows to link value-at-risk computed under these two sets of assumptions. A numerical example performed on Belgian mortality statistics illustrates how the approach proposed in this paper can be implemented in practice.     

World dynamics

In this review of Jay W. Forrester's World Dynamics¹, the first model of the whole world system is described and its potential assessed. The background notion is that the rational revolution, for the first time in mankind's evolution, depends on anticipatory action, not on mere reaction to crises. Computer modelling has a powerful potential of increasing our awareness in areas where human thinking fears to tread ; so that by dealing with a multitude of pressures that may destroy the world systems, world policies might be introduced designed to cope with the pressures simultaneously.     

Accounting for the dissolution of a nation state: Scotland and the Treaty of Union

Building upon the insights of socio-historical accounting research this paper attempts to show accounting’s centrality to major historical events. In this context, accounting is viewed as a technology which was employed in order to implement a particular political programme – the union of the Scottish and English parliaments in 1707. Accounting is presented as both a necessary and impossible technology in this context. Forging an economic compromise between Scottish and English Parliamentarians necessitated an economic calculation of the relative economic power of each country in the first instance, and some calculated reconciliation between the two in the second. However, such a calculation also proved to be impossible as competing political factions contested the figures, ostensibly on technical grounds, but substantively on an ideological basis. Furthermore, building upon the notion of impossibility, the paper shows that political programmes can sometimes be subservient to the technologies that they rely upon for their implementation. Faced with congenitally failing accounting practices the political programmes associated with union had to be modified into something that was deliverable through the constraints of the extant accountability.     

Can banks individually create money out of nothing? — The theories and the empirical evidence

This paper presents the first empirical evidence in the history of banking on the question of whether banks can create money out of nothing. The banking crisis has revived interest in this issue, but it had remained unsettled. Three hypotheses are recognised in the literature. According to the financial intermediation theory of banking, banks are merely intermediaries like other non-bank financial institutions, collecting deposits that are then lent out. According to the fractional reserve theory of banking, individual banks are mere financial intermediaries that cannot create money, but collectively they end up creating money through systemic interaction. A third theory maintains that each individual bank has the power to create money ‘out of nothing’ and does so when it extends credit (the credit creation theory of banking). The question which of the theories is correct has far-reaching implications for research and policy. Surprisingly, despite the longstanding controversy, until now no empirical study has tested the theories. This is the contribution of the present paper. An empirical test is conducted, whereby money is borrowed from a cooperating bank, while its internal records are being monitored, to establish whether in the process of making the loan available to the borrower, the bank transfers these funds from other accounts within or outside the bank, or whether they are newly created. This study establishes for the first time empirically that banks individually create money out of nothing. The money supply is created as ‘fairy dust’ produced by the banks individually, "out of thin air".