Temporal Evolution of Mortality Indicators

Abstract

In Spain, as in other developed countries, significant changes in mortality patterns have occurred during the 20th and 21st centuries. One reflection of these changes is life expectancy, which has improved in this period, although the robustness of this indicator prevents these changes from being of the same order as those for the probability of death. If, moreover, we bear in mind that life expectancy offers no information as to whether this improvement is the same for different age groups, it is important and necessary to turn to other mortality indicators whose past and future evolution in Spain we are going to study. These indicators are applied to Spanish mortality data for the period 1981–2008, for the age range 0–99. To study its future evolution, the mortality ratios have to be projected using an adequate methodology, namely, the Lee-Carter model. Confidence intervals for these predictions can be calculated using the methodology that Lee and Carter apply in their original article for expected lifetime confidence intervals, but they take into account only the error in the prediction of the mortality index obtained from the ARIMA model adjusted to its temporal series, excluding other sources of error such as that introduced by estimations of the other parameters in the model. That is why bootstrap procedures are preferred, permitting the combination of all sources of uncertainty.     

Does the Stock Market Fully Appreciate the Implications of Leading Indicators for Future Earnings? Evidence from Order Backlog

Although leading indicators are becoming increasingly important for equity valuation, disclosures of such indicators suffer from the absence of GAAP related guidance on content and presentation. We explicitly examine (i) whether one leading indicator—order backlog—predicts future earnings, and (ii) whether market participants correctly incorporate such predictive ability in determining share prices. We find that the stock market overweights the contribution of order backlog in predicting future earnings, and a hedge strategy that exploits such overweighting generates significant future abnormal returns. However, such mispricing is not due to analysts' inability to incorporate order backlog into their earnings forecasts.     

Exchange rate exposure and foreign exchange derivatives: do ineffective hedgers modify future derivatives use?

Recent studies examining the relationship between stock returns and exchange rate changes have provided evidence that the exchange rate exposure of non-financial companies is reduced by the use of foreign exchange derivatives. Building on such research, this study investigates whether past ineffective derivative hedging contributes to explaining future derivatives use. To the extent that companies monitor the effectiveness of their currency risk management practices, past ineffective hedgers can be expected to modify their future use of foreign exchange derivatives accordingly. In our study of 94 non-financial US multinationals, we provide evidence that the change in derivatives use from 1996–1998 to 1998–2000 can be explained in part by the ineffective hedging of currency risk in 1996–1998, controlling for variables associated with theories of optimal hedging. Additional analyses confirm that such primary results are robust to firm size, the level of foreign operations, and the use of derivatives to partially hedge currency risk. Our results imply that as exchange markets and risk management practices change, the use of derivatives to manage exchange rate risk also changes. Our contribution to this field of study is that we find evidence that past ineffective hedgers tend to increase their future use of FXDs.     

Enabling control and the problem of incomplete performance indicators

To which extent do managers care about the design characteristics of performance indicators and other control systems? The paper examines this question with the help of the framework of enabling and coercive control. Drawing upon data from a longitudinal field study in a manufacturing organisation, we study operational managers’ attitudes towards the incompleteness of performance indicators. Managers are likely to perceive performance indicators as enabling if the latter facilitate their actions without unduly constraining them. This is true even for incomplete performance indicators as long as managers can handle these indicators in a flexible way, treating them as means rather than ends when carrying out their work. Our case also shows, however, how a flexible use of indicators becomes more difficult to sustain once top management signals an increased importance of the indicators. Incompleteness then becomes a more pressing concern for managers. We illuminate the various forms of top management sense-giving through which such tightening of control is achieved and we show how they translate into managers’ perception of the control system as being a coercive rather than enabling one. Taken together, the findings of the present paper add to our understanding of enabling and coercive forms of control and also extend previous studies that have addressed the problem of incomplete accounting information.     

Does investor sentiment really matter?

We examine the role sentiment plays and its manifestation in the trading behavior of investors in the U.S. stock market. Our findings support the notion that sentiment-induced buying and selling is an important determinant of stock price variation. While ‘classical’ asset pricing categorizes investors who trade in ways not consistent with mean-variance optimization as ‘irrational,’ we show that this traditional view should not hastily be evoked to characterize sentiment-driven investing. We instead show that sentiment-driven investors can trade against the herd and sell when prices are overinflated as a result of over-bullishness and vice versa. The asset pricing implications of this paper are that sentiment is linked to shifts in risk tolerance and this triggers contrarian-type behavior. In sum, we uncover the following regarding the behavior of sentiment-driven investors; firstly, they are more apt to trade on survey-based indicators rather than market-based indicators. Secondly, they trade on the basis of information extracted from individual, rather than institutional, investor surveys. Thirdly, they respond asymmetrically to shifts in sentiment and trade more aggressively during periods of declining sentiment. Finally, there is asymmetry in the role of sentiment with respect to business conditions whereby such buying and selling is more pronounced during bear markets.     

Implementation Guidance for Standards and Revenue Trend in Aggressive Reporting

This study examines the interactive effect of including the implementation guidance in accounting standards (with and without indicators) and different reported revenue trends (increasing, decreasing, and volatile) in aggressive reporting. For this purpose, we adopt a 2 × 3 between-subjects experiment. Aggressive reporting is measured by managers' perception of control and judgment regarding revenue recognition. The results of this experiment indicate that including the implementation guidance can constrain managers' revenue recognition judgments. The results show that for decreasing revenue trends, the inclusion of indicators for implementation does not influences managers' judgments regarding revenue recognition. For increasing revenue trends, the inclusion of guidance indicators matters in that the managers' judgments regarding revenue recognition are more aggressive in conditions without indicators than in conditions with indicators. The findings of this study extend the literature on implementation guidance in accounting standards and aggressive reporting.     

Mark-to-market accounting and liquidity pricing

When liquidity plays an important role as in financial crises, asset prices may reflect the amount of liquidity available rather than the asset's future earning power. Using market prices to assess financial institutions’ solvency in such circumstances is not desirable. We show that a shock in the insurance sector can cause the current market value of banks’ assets to fall below their liabilities so they are insolvent. In contrast, if values based on historic cost are used, banks can continue and meet all their future liabilities. We discuss the implications for the debate on mark-to-market versus historic cost accounting.     

Portraits of youth: Understanding young people''s relationship with the future

Young people's relationship with the future is complex and contradictory. Some surveys and commentaries suggest most are optimistic, others that they are pessimistic. Some indicate they are adapted to the postmodern world of rapid change and uncertainty, others that they are anxious and apprehensive. Some of these differences can be readily explained; others require more thorough analysis. We need a better understanding of this relationship if we are to improve both young people's personal well-being and humanity's prospects. It may help if we distinguish between three different images—modern, postmodern and transformational.     

Poverty,Preference or Pensioners? Measuring Material Deprivation in the UK*

Indicators of material deprivation are typically based on a two-part question, asking, first, whether respondents possess a series of deprivation items and, second – if they do not – whether this is because of a lack of resources or is by choice. This second subquestion, or ‘enforced lack’ criterion, is ubiquitous but its efficacy has been questioned by a number of authors. In an important critique published in Fiscal Studies, McKay (2004) claimed that older people were more likely than younger respondents to report that they did not want the items they lacked, despite their lower incomes, and also that the enforced lack criterion introduced a subjectivity which, in effect, required respondents to feel poor in order to be classified as such. This critique has potentially profound implications for poverty measurement. In this paper, we seek to address the question of whether, if we are to employ indicators of material deprivation for poverty measurement, we should include the enforced lack criterion or not. In seeking to answer this question, we draw on data from the British Household Panel Survey (BHPS) and present tests of reliability and validity on indices of material deprivation, with and without the enforced lack criterion. Using odds ratio and analysis of variance methods, we find that the inclusion of the enforced lack criterion provides a measure of material deprivation which is both more reliable, and more valid based on a subjective measure of deprivation as well as on a majority of more objective forms of deprivation. Amongst the remaining minority (ill health for both methods and income quintile for the analysis of variance method), the divergent results can be explained, at least in part, by the older age profile of respondents in poor health and on low incomes. Thus, while there are legitimate concerns about the performance of such deprivation indicators amongst certain subgroups – in particular, amongst older people – on aggregate the enforced lack criterion helps to distinguish between poverty and preference.     

Exploring the generative power of performance measurement systems design

Prior studies recognise the enabling power of incompleteness in the design of Performance Measurement Systems (PMS). We add to these studies by exploring the ‘time dimension’ of incompleteness as a way to delve into the generative power of design. To this aim, we rely upon the experience of a knowledge-intensive organization during the design of a new PMS. While knowledge complexity engaged the participants within an open-ended design process, incomplete measures were associated with unfolding memories of the past and confident beliefs in future solutions, which generated effects through the knowledge gaps that they entailed, as well as through the projections in the past and in the future that they enabled. By delving into the time dimension of incompleteness, we add to prior studies on PMS design by showing the relationships between managers' hopes for the future, patterns of memory (and forgetting) of the past and incompleteness in design. In particular, we show that although incomplete measures stimulate managers' aspirations and search for further possibilities, it is forgetting about the past (its evolving memories) that triggers this search, facilitates new actors entering the design process and enables unpredictable outcomes of design.     

The future as metaphor

One of the fascinating and frustrating facts of modern future watching is the almost shameless manner with which the concept of the future is used and abused. It is demonstrably an idea and a word that means quite different things according to a variety of factors. As the assumptions we make about what we call ‘the future’ can influence our choices, a clearer understanding of our inconsistent employment of the term is always in order. In this essay five prominent ways we can think about the future are explored. These concern imagining the future as time, as a challenge, as a destination, as an answer, and as a judgment.     

Resocialing work? Anticipatory anthropology of the labor process

My research focuses on the possible future transformations of work in the increasingly dominant computer-technology-based work environment. I surmise that one characteristic that future work might take the form of is a renewed and expanded “sociality”, in which co-operation, self-management, and qualitative social interaction are fostered to counter the potentially isolating computer-mediated environment. Since the advantage of such new technologies is also their opposite capacity to expand communication, one must encourage more communication to make use of these capabilities. Although I am somewhat skeptical about the current climate of cyberenthusiasm, I recognize that, as ethnographers, we need to take these speculations seriously and, where possible, participate actively in the creation of the kinds of futures which we prefer. I have taken a participant–observation approach to the study of “proto-cyberspace” venues which are widely seen as suggestive of the social relations of a future new social formation. I begin this essay by analyzing the argument for the resocialing hypothesis, then consider the opposite arguments which see a degradation of social relations in the work environment. Data have been derived primarily from my studies of automated information technology-mediated labor processes in the USA, the UK, and the Nordic countries.     

Anticipatory action learning: conversations about the future

This paper proposes experimenting with anticipatory action learning for helping to create the future. It is an interactive process that relies strongly on a central thread of conversation among a variety of participants, from multiple perspectives, concerned with the social unit or project. Basically, anticipatory action learning is action research modified for foresight. It integrates research/search with decision and action, and downgrades the prerogative of a research elite, empowering all participants. Conversation allows meaning from a range of different worldviews to be shared and negotiated for studying, theorising and otherwise engaging the future—and more importantly, for helping to create it. Criteria are proposed for anticipatory action learning and procedural and administrative limitations are addressed.The visions we have about our own futures vary according to the mindset each of us stands in. It would be fascinating to compare the personally envisioned futures of everyone at an international meeting of futurists. Our futures should converge in some way where we share common interests as futurists, and diverge on the point of intercultural variety. But, would they differ from each other as widely as those of Aung San Suu Kyi and the Burmese generals?It would be even more telling to compare the range of alternative futures envisioned by world leaders with the visions of their constituents and especially, say, with the visions of a woman in Africa’s Central Lakes region and of the homeless in Osaka.In a similar way, the means of engaging the future in order to study it, and its uncertainties, and the way people think about it, are variously dependent on the mindsets of the scholars and researchers, and the realities they find themselves in. Methodologies of futures studies range across the predictable: from empirical quantitative projection (linear and non-linear); to qualitative interpretation and critical analysis; and to participatory action research or its associate, action learning.Then, futures studies differs according to the disciplinary framework of the researcher, whether in physics, ecology, complexity science, social science and the humanities, critical cultural theory or philosophy. Further, there is the division of the pragmatic and academic perspectives.Actually, the very fact of having a formal methodology is itself derived from a dominant civilisational and ethical perspective, mainly Western.There is another important distinction in futures studies. On the one hand, there is the perspective from which futurists research, analyse and critique the future, or more precisely what other people think and say about the future. On the other, there is the perspective from which people in the focal social unit may think and act to create their own futures.Then, acting to create a future poses at least two further distinctions depending on whether one believes the future is structurally preordained, or whether human interaction and intervention play a significant part.It is from the perspective of participative human agency acting to create one future or another, at least partially, that this paper proceeds.Before going further, let us address the question of whether future-creating can rightly be claimed to constitute the study of the future, or future studies. If it is not part of futures studies, then at least future-creating activity does rely on input from the field, the results of studying and reflecting on alternative options for the future—futures, plural. Whatever way we look at creating the future, as opposed to merely researching data about it, the activity does represent a fairly direct, personal engagement of the future, as much as anyone can do about a time–space that has yet to arrive. This is an important distinction, since many empirical futures studies do not so directly engage the future, well not personally. Rather, they examine stated opinions of others about future options, and other people’s preferences, emerging issues and the like, themselves all valuable activities.

If, as Michel Godet has said, ‘...the future is not written anywhere and has still to be built...’ [[1]], creating the future is a central activity which at least deserves full consideration by the field of futures studies, especially if it relies on the analysis and critique of data generated or accessed around the activity itself.

Futures prices as risk-adjusted forecasts of monetary policy

Many researchers have used federal funds futures rates as measures of financial markets’ expectations of future monetary policy. However, to the extent that federal funds futures reflect risk premia, these measures require some adjustment. In this paper, we document that excess returns on federal funds futures have been positive on average and strongly countercyclical. In particular, excess returns are surprisingly well predicted by macroeconomic indicators such as employment growth and financial business-cycle indicators such as Treasury yield spreads and corporate bond spreads. Excess returns on eurodollar futures display similar patterns. We document that simply ignoring these risk premia significantly biases forecasts of the future path of monetary policy. We also show that risk premia matter for some futures-based measures of monetary policy shocks used in the literature.     

Mediating instruments and making markets: Capital budgeting, science and the economy

We examine in this paper how certain instruments link science and the economy through acting on capital budgeting decisions, and in doing so how they contribute to the process of making markets. We use the term “mediating instruments” to refer to those practices that frame the capital spending decisions of individual firms and agencies, and that help to align them with investments made by other firms and agencies in the same or related industries. Our substantive focus is on the microprocessor industry, and the roles of “Moore’s Law” and “technology roadmaps”. We examine the ways in which these instruments envision a future, and how they link a multitude of actors and domains in such a way that the making of future markets for microprocessors and related devices can continue. The paper begins with a discussion of existing literatures on capital budgeting, science studies, and recent economic sociology, together with the reasoning behind the notion of “mediating instruments”. We then address the substantive issues in three stages. Firstly, we consider the role of “Moore’s Law” in shaping the fundamental expectations of an entire set of industries about rates of increase in the power and complexity of semiconductor devices, and the timing of those increases. Secondly, we examine the roles of “technology roadmaps” in translating the simplified imperatives of Moore’s Law into a framework that can guide and encourage the myriad of highly uncertain and confidential investment decisions of firms and other agencies. Thirdly, we explore one particular and recent example of major capital investment, that of post-optical lithography. The paper seeks to help remedy the empirical deficit in studies of capital budgeting practices, and to demonstrate that investment is much more than a matter of valuation techniques. We argue, through the case of the microprocessor industry, for greater attention to investment as an inter-firm and inter-agency process, thus lessening the fixation in studies of capital budgeting on the traditional hierarchical and bounded organization. In addition, we seek to extend and illustrate empirically the richness of the notion of “mediating instruments” for researchers in accounting, science studies, and economic sociology.     

“Every today was a tomorrow”: An integral method for indexing the social mediation of preferred futures

The visions we hold of the future, whether they are of utopias or dystopias, are not simply a matter of personal imagination. Our conceptions of the future are mediated to us as much as they are privately created by us. To this point, futures studies have not developed an integrative and broad-based framework for considering the social mediation of futures. Understanding how social mediation impacts on our futures visioning requires an interpretive framework that can cope with the multilayered nature of futures visions, the worldviews that are associated with them and a theory of mediation that can be applied within such a context of ‘depth’. Using theory-building methodology, the current paper attempts this task by describing a theory of social mediation that builds on the integral futures framework. An application of the framework explores the relationship between various scenarios of health care futures, their associated worldviews and the mediational factors that influence our visions of future health care systems.     

American dreams,American imperatives

In this article I.F. Clarke continues his theme that the special nature of life in the American colonies inevitably led to an extra-European view of society. That can in general be called a composite idea—individuality, liberty, freedom, and great opportunities—and it appealed to many Europeans who saw in the USA a hope for the future and a model for imitation. It is reported that when some of Robert Owen's contingent crossed the Atlantic to New Harmony, they celebrated their approach to New York with a song composed by one of the party. ‘Land of the West! we come to thee,’ they sang. ‘ Sick of the old world's sophistry’, they went on. Today, only the well-off can sail into New York, usually on the QE2, and they do not usually sing as they sail.     

Exploitation versus exploration in multinational firms: Implications for the future of international business

Given the economic weight of multinational corporations and their privileged access to resources, many different scenarios can be built about the future of international business and about the future impact of international business on economic, technological, and social development. In this paper, we argue that multinationals do not form a uniform organisational population, and we provide empirical evidence of the existence of traditional, rigid entities seeking benefits from low-risk exploitative strategies on one hand, and of flexible multinationals seeking higher performance levels by balancing the trade-offs between exploration and exploitation on the other hand. As these two sub-populations compete with one another for resources, we use a population ecology perspective to study likely ecological scenarios for the future. Our conclusion is that traditional multinationals tend to prevail over flexible multinationals, and the conditions required for a future society to allow a genuine growth of flexible multinationals are unlikely. This implies that multinationals remain primarily exploitative, and that as such, they will only be associated with marginal economic, technological, and social developments in the future. Other organisational forms, such as entrepreneurial small business and communities of practices are shown to be much more likely vehicles through which society can progress and innovate.     

Bank Disclosure and Market Assessment of Financial Fragility: Evidence from Turkish Banks’ Equity Prices

In this paper we explore whether Turkish banks with worsening indicators of financial fragility were subject to market monitoring during the years leading to the 2000/2001 crisis, and how the quality and timeliness of the disclosure affect market reaction. We find that shareholders reacted negatively to indicators of financial fragility such as increases in maturity mismatches, currency mismatches, and non-performing loans, showing shareholders’ concerns about the impact of financial fragility indicators on future profits. We also find that audited statements that show larger reporting lags, are not informative, pointing to the need of improving their timeliness. Finally, our study suggests that the finding that securities prices react to financial fragility indicators should not be taken as sufficient evidence of banks’ safety and soundness.