Insolvency practice in the field of football

This paper is concerned with UK insolvency practice. It considers how the field of insolvency has developed since the passing of the Insolvency Act 1986 through a Bourdieusian theoretical lens. The case of the administration of Gretna football club is presented as a “special case of what is possible” to enable one to consider “the deepest logic of the social world” (Bourdieu, 1998, p. 4). Football is a field with its own complex insolvency rules which are incommensurable with the Insolvency Act. The case therefore presents an opportunity to reveal that whether insolvency laws are applied or not is determined by a complex socio-political process. Through revealing the socio-political process the paper problematises the notion that insolvency practice is neutral.     

Accounting for organizational performance: The construction of the customer in the privatized water industry

The concept of the customer exercising market power to obtain the desired combination of attributes in terms of price and quality of the product to be purchased has been integral to the Conservative Government's justification of privatization. However the practical import of giving effect to customer sovereignty was problematic if it was not accompanied by an increase in competition and choice for customers. This is particularly true of the recently privatized Water industry, where the monopoly character of the industry has remained unaltered. To give effect to its claims that customers would benefit, and to prevent overcharging and to protect standards of service, the Government had to introduce a new regulatory system operated by the Office of Water Services (Ofwat). In pursuing these objectives the Director General of Ofwat has stated that his aim is to secure for the customer a place that he/she would have were the companies operating in a competitive market. This paper, drawing on Miller and Rose's analysis of Governing economic life, examines the attempts that have been made to give effect to this “place for customers”. In doing so much of the analysis focuses on exploring how notions of “the customer”, and “customer service”, have been constructed through new forms of accounting and accountability, and how this new accounting for customer service has enabled the concept of “the customer” to be made operational within the newly privatized Water plcs, even though their monopoly status has remained unaltered. Central to this has been Ofwat's determination of performance indicators on levels of service to customers, its measurement of company performance against these indicators, and assessments based on these measures of companies' success in “serving customers”. The paper seeks to demonstrate how these new accounts of organizational performance required of the Water plcs by Ofwat have only been made possible by rendering “customer service” a calculable and comparable entity. The paper also looks at some of the ways in which this accounting for customer service has been incorporated into other accounts of managerial and organizational performance.     

The Australian insolvency regime revisited: a precis of the next leap forward

Australian corporate insolvency laws contained within Chapter 5 of the Corporations Act are currently being reviewed with respect to four principal areas identified by Australian Government Treasury. The four themes of review include employee ‘benefit’ enhancements; seeking to deter misconduct of company officers; rules around insolvency practitioner disclosure with respect to their remuneration and related independence issues; and some minor proposed changes to the voluntary administration procedure, widely regarded as requiring only minor adjustment. At this time, the draft legislation is not available for general release and is being discussed within the Australian Government appointed Insolvency Law Advisory Group. The next steps are public comment for review of draft legislation and then operation of the legislative change. These are expected to occur in 2007. This paper seeks to outline the likely issues associated with the expected reforms of the Australian insolvency regime. Copyright © 2006 John Wiley & Sons, Ltd.     

Regulator performance,regulatory environment and outcomes: An examination of insurance regulator career incentives on state insurance markets

In this paper we test whether the past or future labor market choices of insurance commissioners provide incentives for regulators in states with price regulation to either favor or oppose the industry by allowing prices that differ significantly from what would otherwise be the competitive market outcome. Using biographical data on insurance regulators, economic and state specific market structure and regulatory variables, and state premium and loss data on the personal automobile insurance market, we find no evidence consumers in prior approval states paid significantly different “unit prices” for insurance than consumers in states that allow competitive market forces to determine equilibrium prices during the time period 1985–2002. We do, however, find evidence regulators who obtained the position of insurance commissioner by popular election and those who seek higher elective office following their tenure as insurance commissioner allow higher overall “unit prices” relative to competitive market states. The “unit price” of insurance in regulated states is not statistically different from the competitive market outcome for regulators that make lateral moves back into state government and it is mildly higher for regulators who enter the insurance industry following their tenure. Finally, we find some evidence regulators who describe themselves as consumer advocates are successful reducing the price of insurance in favor of consumers in regulated markets. Overall the results are consistent with the existence of asymmetric information in the regulatory process that agents use to enhance their career aspirations.     

The global financial crisis and the evolution of markets, institutions and regulation

This paper analyses the recent global financial crisis in the context of the dual processes of market development and regulation. It discusses how, in the absence of a globally integrated financial framework, past and present regulations and interventions in reaction to national and global financial crises did not resolve the cross border regulatory arbitrage. The paper discusses how crises often lead to the emergence of new national and international institutions. It also analyses the proposed “new global framework” that needs to be in place if the policy recommendations contained in the G20 communiqué are going to be effectively implemented. The paper argues that unless international agreements are ratified by all nations and become part of national rules and laws, the presence of regulatory arbitrage and the lack of adequate cross border information and data may prevent the global economy from addressing the underlying causes of the recent global financial crisis. The paper also discusses the evolution of central banks and their new role in contributing to global financial stability. The paper argues that the recent global financial crisis has provided a unique opportunity to go beyond economic data and attempt to capture cross border financial data and other information that could assist international and national institutions to measure and manage financial risk more effectively. Finally, the paper discusses “too big to fail” and argues that only an internationally integrated financial system will make large banks global, both when operational and in the event of insolvency.     

ATM surcharge bans and bank market structure: The case of Iowa and its neighbors

It is frequently claimed that high ATM surcharges actually attract customers to the banks that impose them, particularly if they operate large ATM networks. By exploiting as “natural experiments” two events associated with the lifting of surcharge bans in Iowa and in the states that neighbor Iowa, this paper seeks to test for the implications of this phenomenon as it applies to the market shares of banking institutions and to several aspects of market structure. Consistent with predictions, results of “difference-in-difference” analyses suggest that the retail account shares of larger market participants increased relative to those of smaller competitors, market concentration increased, and the number of market competitors decreased after the lifting of surcharge bans – all relative to what would have occurred had there been no change in authority to surcharge.     

Dirty work and the construction of identity. An ethnographic study of management accounting practices

This paper examines the processes by which identity work influences accounting and organisational practices. Analysing ethnographic material, we study how accountants engage in a struggle for recognition in a context where tensions emerge from the confrontation between idealised occupational aspirations and situated possibilities. To theorise this struggle we draw on Everett Hughes’s conceptualisation of a moral division of labour. Building on his concept of “dirty work”, we differentiate between the “unclean” and the “polluted”. Accountants have to perform tasks that are incompatible with the aspirational identities they claim; more than “boring”, these tasks become symbols of misrecognition. We call these unclean tasks. Yet even tasks that, in a more favourable context, would be associated with prestigious aspects of the job, can become degrading in specific situations. We call them polluted work. We highlight how trying to comply with a positively-anticipated role transition can help avoid unclean work yet generate more polluted work. Our analysis suggests that paying greater attention to symbolic differentiations between prestigious and shameful aspects of work can improve our understanding of accounting, identity work and organisational practices.     

Capital market imperfections and the theory of optimum currency areas

This paper studies how within- and cross-country capital market imperfections affect the welfare effects of forming a currency union. The analysis considers a bank-only world where intermediaries compete in Cournot fashion and monitoring and state verification are costly. The first part determines the credit market equilibrium and the optimal number of banks, prior to joining the union. The second part discusses the benefits from joining a currency union. A competition effect is identified and related to the added monitoring costs that banks may incur when operating outside their home country, through an argument akin to the Brander-Krugman “reciprocal dumping” model of bilateral trade. However, in our framework, whether joining a union raises welfare of the home country is ambiguous; it depends on the relative strength of “investment creation” and “intermediation diversion” effects.     

Wendell Bell: The futurist who would put my grandmother in prison

Wendell Bell made major contributions to futures studies, and to my own understanding of the field, by helping establish the knowledge base of the field; developing the foundational concept “images of the future”; focusing on the ethical dimensions of futures studies; insisting there is a futures field that should be nurtured; and proposing an interesting use for “equal opportunity” and “affirmative action” laws in the US criminal justice system.     

Stealing Deposits: Deposit Insurance,Risk‐Taking,and the Removal of Market Discipline in Early 20th‐Century Banks

Deposit insurance reduces liquidity risk but can increase insolvency risk by encouraging reckless behavior. Several U.S. states installed deposit insurance laws before the creation of the Federal Deposit Insurance Corporation, and those laws applied only to some depository institutions within those states. These experiments present a unique testing ground for investigating the effect of deposit insurance. We show that deposit insurance removed market discipline constraining uninsured banks. Taking advantage of World War I's rise in world agricultural prices, insured banks increased their insolvency risk and competed aggressively for deposits. When prices fell after the war, the insurance systems collapsed and suffered high losses.     

Federal Reserve financial crisis lending programs and bank stock returns

We use an E-GARCH model to estimate the wealth effects of Federal Reserve lending during the financial crisis to Investment banks (I-Banks), “Too Big to Fail” (TBTF) banks, and “traditional” commercial banks. Borrowing from the Term Auction Facility program has negative wealth effects for all banks and I-banks in particular. We also find that the market view of the liquidity programs changed across the sample sub-periods. I-Bank and TBTF bank borrowing from the discount window is initially viewed positively, however continued use of the discount window and the Term Auction Facility was generally (though not universally) viewed negatively. Commercial Paper Funding Facility program participation is consistently positive only for traditional banks and programs that focus on the purchase of specific securities (e.g., commercial paper) to address specific problems also appear to primarily benefit traditional banks. The inconsistency of results across the time periods of the crisis is telling as market participants struggled to discern what access to these programs meant.     

Cross‐border Insolvency and Legal Transnationalisation

The last 20 years has seen an explosion of approaches for dealing with an inevitable consequence of globalised markets, that of cross‐border insolvencies. This article places phenomena such as the United Nations Commission on International Trade Law Model Law on Cross‐border Insolvency and Cross‐border Insolvency Agreements (also known as Protocols) within the context of developing laws on international commercial transactions. First, it briefly describes the evolution of the international commercial law (sometimes known as the law merchant) to provide a context to understanding the international commercial responses to the problems created by cross‐border insolvencies. Next, it outlines the range of approaches being adopted by states and multilateral bodies in recent decades to resolve cross‐border insolvency issues. Finally it draws some preliminary conclusions on the potential implication of this transnationalisation process and broader international commercial law perspective, in particular on the capacity of cross‐border insolvency agreements to address cross‐border insolvency issues. Copyright © 2012 John Wiley & Sons, Ltd.     

Auction failures and the market for auction rate securities

The market for auction rate securities (ARS) made headlines during the second week of February 2008 when auctions at which the bonds’ interest rates reset experienced a wave of “failures.” Contrary to headlines that attribute the failures to a “frozen” market or investors’ “irrationality,” we find that (1) even at their height, less than 50% of ARS experienced auction failures, (2) the likelihood of auction failure was directly related to the level of the bonds’ “maximum auction rates,” (3) the implied market clearing yields of bonds with failed auctions were significantly above their maximum auction rates, and (4) ARS yields were generally higher than yields of various cash equivalent investment alternatives. We infer that investors priced the possibility of auctions failures into ARS yields and rationally declined to bid for bonds for which required market yields exceeded their maximum auction rates.     

Noise traders,exchange rate disconnect puzzle,and the Tobin tax

This paper proposes a framework to explain the “exchange rate disconnect puzzle”. Two types of foreign exchange traders, rational traders and noise traders are introduced into a sticky-price general-equilibrium model. The presence of noise traders creates deviations from the uncovered interest parity. Combined with local currency pricing and consumption-smoothing behavior, our model can help to explain the “disconnect puzzle”. The excess exchange rate volatility caused by noise traders can be reduced by the ‘Tobin tax’. However, the effect of the ‘Tobin tax’ depends on the market structure and the interaction between the Tobin tax and other trading costs.     

A darker side to decentralized banks: Market power and credit rationing in SME lending

We use loan-level data to study how the organizational structure of banks impacts small business lending. We find that decentralized banks—where branch managers have greater autonomy over lending decisions—give larger loans to small firms and those with “soft information.” However, decentralized banks are also more responsive to their own competitive environment. They are more likely to expand credit when faced with competition but also cherry pick customers and restrict credit when they have market power. This “darker side” to decentralized banks in concentrated markets highlights that the level of local banking competition is key to determining which organizational structure provides better lending terms for small businesses.     

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

We present empirical evidence that short sales contribute to market efficiency by increasing the speed of price adjustment to not only private/public firm-specific information but also market-wide information. Shortable stocks are characterized by weaker trade continuity and stronger quote reversals. They adjust faster to new information than non-shortable counterparts. These findings remain robust even in an “up” market condition in which short sales are not binding. The amount of information incorporated in each trade is also significantly higher for shortable than non-shortable stocks in both “up” and “down” market conditions. After controlling for firm size, trading volume, liquidity, price and option trading, short sales stand out as one of the significant factors that speed up the price adjustment.     

On the determinants of “small” and “large” foreign exchange market interventions: The case of the Japanese interventions in the 1990s

During the past 30 years, central banks have often intervened in foreign exchange markets, and the magnitude of their foreign exchange market interventions has varied widely. We develop a quantitative reaction function model that renders it possible to examine the determinants of “small” and “large” interventions. We apply the model to analyzing the intervention policy of the Japanese monetary authorities (JMA) in the yen/U.S. dollar market during the period from 1991 through 2001. To this end, we use recently released official data on the foreign exchange market interventions of the JMA. We find that the JMA tended to conduct large interventions when the yen/U.S. dollar exchange rate drifted away from an “implicit target exchange rate.”     

The future of the self-image of the human being in the Age of Transhumanism, Neurotechnology and Global Transition

In the present moment of cultural and political transition, one question seems to become the center of most other societal and civilizational questions: will the basic self-perception of the human being change under the influence of the new “neurotechnologies” and its accompanying ideologies like “Human enhancement” and “Transhumanism”? And if yes, how? Applied consciousness research is currently one-sidedly understood as brain research, and it is carried out mainly by the Natural Sciences under the influence of the “Economic–Technological Complex” and its relatively narrow interests. With its paradigmatic materialism determining the cultural spread of its temporary findings, it is already modifying our imaginary about what a human being is, what its rational self-determination can be, and how a “good society” can work. What is at stake with the change related to the findings of the new “consciousness technologies” is not only the principal socio-philosophical status of the human “self” or “I”, but also the related concepts of humanism, open societies, individualism and rationality. Thus, the new neurotechnologies and their “neurophilosophies” are currently in the process of profoundly influencing the very basics of our cultural self-understanding, grown over centuries. This article discusses some of the implications of this development within the greater picture of the current “global mindset change”.     

Deposit insurance, bank regulation, and financial system risks

Empirical evidence is presented to show that in modern times banks can hedge liquidity shocks but could not do so prior to FDIC insurance. However, the government's limitations in properly pricing FDIC insurance are leading to many current examples of moral hazard. A model is presented to show that if insurance premiums are set to be “actuarially fair,” incentives for banks to take excessive systematic risks remain. Motivated by empirical evidence that money market mutual funds also can hedge liquidity shocks, I consider an alternative government insurance system that mitigates distortions to risk-taking yet preserves liquidity hedging and information synergies.