Government interventions and default risk: Does one size fit all?

We examine the effectiveness of the financial sector rescue packages provided by the national governments during the 2008 financial crisis. This study questions the implicit assumption that government interventions have an uniform effect on the default risk of individual banks. After testing the results for sensitivity, our main findings suggest that there exists a significant negative relationship between the announcement of the financial sector rescue packages and the daily change of the credit default premium. However, quantile regressions show that the effectiveness of these packages differs across banks: most interventions do not decrease the risk of intermediate to low-risk banks, while they do reduce the risk of high-risk banks. Besides, we find that interventions aimed at specific financial institutions are more effective in restraining banking risk than broad interventions taken to stabilize the financial market as a whole.     

The impact of FX central bank intervention in a noise trading framework

In this paper, we analyse the effectiveness of the direct central bank interventions using a new effectiveness criterion. To this aim, we investigate the effects of central bank interventions (CBI) in a noise trading model with chartists and fundamentalists. We first estimate a model in which chartists extrapolate past returns and fundamentalists forecast a mean reverting dynamics of the exchange rate towards a fundamental value. Then, we investigate the role of central bank interventions for explaining the switching properties between the two types of agents. We find evidence that in the medium run, interventions increase the proportion of fundamentalists and therefore exert some stabilizing influence on the exchange rate.     

Interventions in the Yen–dollar spot market: A story of price,volatility and volume

We test the effectiveness of Bank of Japan (BOJ)’s foreign exchange interventions on conditional first and second moments of exchange rate returns and traded volumes, using a bivariate EGARCH model of the Yen/USD market from 5-13-1991 to 3-16-2004. We also estimate a friction model of BOJ’s intervention reaction function based on reducing short-term market disorderliness and supplementing domestic monetary policy. Important finding of this study are that: (i) we find ineffectiveness of BOJ interventions in influencing exchange rate trends pre-1995, in general, but effectiveness post-1995; (ii) FED intervention amplified the effectiveness of the BOJ transactions; (iii) interventions amplified market volatility and volumes through a ‘learning by trading’ process; (iv) BOJ’s interventions were based on ‘leaning against the wind’ motivations on the exchange rate trend and volumes; and (v) BOJ interventions were vigorously used in support of domestic monetary policy objectives post-1995. Though some of our findings confirm recent studies, our analysis goes deeper to provide new findings with important implications for central banks and foreign exchange market participants.     

Do interventions in foreign exchange markets modify investors' expectations? The experience of Japan between 1992 and 2004

The purpose of this paper is to analyze the impact of the Bank of Japan's official interventions on the JPY/USD parity during the period 1992–2004. The novelty of our approach is to combine two recent advances of the empirical literature on foreign exchange interventions: (i) drawing on over-the-counter option prices to characterize more precisely the distribution of market expectations; (ii) redefining interventions in terms of events as they tend to come in clusters. Moreover, in order to deal with the features of the data (small sample size, non-standard distribution), we use bootstrap tests.We show that interventions have a significant impact on the mean expectation (the forward rate). The results are more ambiguous for variance. Additionally, we find that the effect of interventions on skewness is significant, robust to different definitions of skewness, and consistent with the direction of interventions. On the contrary, our results clearly show that kurtosis is not affected by interventions. We finally show that: (i) coordination increases effectiveness of interventions; (ii) results are not altered when controlling for other economic and political news.     

Implementing Evidence-Based Practice in Health Care

This article summarizes recent research on the effectiveness of efforts to implement evidence-based health care. The authors conclude that the evidence in support of single interventions being effective in bringing about practitioner change is weak at best. The authors give examples and evaluative comments on more complex organizational and systemic interventions that are aimed at changing clinical practice, and discuss some of the barriers to their application.     

Is foreign exchange intervention by central banks bad news for debt markets?: A case of Reserve Bank of Australia's interventions 1986–2003

We investigate the effects of the Reserve Bank of Australia's foreign exchange interventions on the USD/AUD market and 90-day and 10-year interest rate futures markets for the period July 1986–December 2003. Using recently released revised and updated intervention data, we investigate contemporaneous and disaggregated intervention influences and find significant evidence for (i) intervention effectiveness in moderating the contemporaneous exchange rate movements especially if interventions were cumulative and large, (ii) exchange rate volatility reducing effect with a day's lag, (iii) undesirable interest rate movements following interventions in some periods compromising monetary policy effectiveness, and (iv) a volatility reducing effect of cumulative interventions in the 90-day rate, and a volatility increasing effect of large interventions in both the 90-day and 10-year rate futures. These findings are a unique and significant contribution to the prevailing literature as they demonstrate that the RBA's interventions matter not only for the foreign exchange market but also for the debt markets.     

Informative trading or just costly noise? An analysis of Central Bank interventions

We conduct an empirical investigation of the impact of Central Bank intervention on the process of price formation in foreign exchange markets. The main contributions of this paper are (i) in considering the effects of official interventions on multiple dimensions of such a process beyond the first and second moment of currency returns and (ii) in exploiting insights from the analysis of market liquidity in proximity of these trades to explain their effectiveness. For that purpose, we employ a unique dataset of tick-by-tick indicative quotes and intraday (informative) sterilized spot interventions and (uninformative) customer transactions executed by the Swiss National Bank (SNB) on the Swiss Franc/U.S. Dollar exchange rate (CHFUSD) between 1996 and 1998. Using several empirical strategies (some of which are novel to the exchange rate literature), we find that the effectiveness of these trades is crucially related to their perceived information content, rather than to imperfect substitutability or inventory considerations. Indeed, regardless of their size, only SNB interventions (especially when unexpected or leaning against the wind) have significant and persistent effects on daily CHFUSD returns, although they often fail to smooth currency fluctuations. Nonetheless, only SNB interventions, regardless of their effectiveness, induce significant misinformation and heterogeneity of beliefs among market participants and deteriorate market liquidity. These externalities always translate into higher, economically significant transaction costs borne by investors.     

On the effectiveness of exchange rate interventions in emerging markets

We analyze the effectiveness of exchange rate interventions for a panel of 18 emerging market economies during the period 2003–2011. Using an error-correction model approach, we find that on average, intervention is effective in moving the real exchange rate in the desired direction, controlling for deviations from the equilibrium and short-term changes in fundamentals and global financial variables. Our results are robust to different samples and estimation methods. We find little evidence of asymmetries in the effect of sales and purchases, but some evidence of more effective interventions for large deviations from the equilibrium. We also explore differences across countries according to the possible transmission channels and nature of some global shocks.     

The role of employer learning and regulatory interventions in mitigating executive gender pay gap

This paper examines the role of information and regulatory interventions in mitigating the executive gender pay gap. We find female executives receive about 34% less compared to equivalent males from the same cohort, which falls by half over tenure within the company, but remains systematically significant throughout. The gender pay gap is the highest for young female executives and in the financial sector. Both demand-side (board gender quotas) and supply-side (family policies) regulatory interventions are associated with a lower gender gap in executive pay. Board gender quotas are associated with lower gender pay gap for experienced female executives in the highest age bracket. In contrast, supply-side interventions are associated with lower gender pay gap for the youngest female executives. Our results have important implications for the relative effectiveness of public policies that aim to reduce gender imbalance in corporate leadership and pay.     

Corporate governance and elites

Using a qualitative methodology (interviews), we examine the relationship between the effectiveness of corporate governance mechanisms and elitist interventions. In doing this, we identify three elitist groups – political, cultural and religious, and investigate how they shape the legitimacy and effectiveness (or otherwise) of the institutional drivers of corporate governance in Nigeria. We caution the widely-held notion in the literature which suggests that institutions act as a check on the behaviour of elites and influence how elites compete and emerge. Alternatively, we argue that elites, in the presence of institutional voids, can invent, circumvent and corrupt institutions.     

The Rise and Rise of Evidence in Health Care

Health care practitioners (especially doctors) have always given assurances that what they do is efficacious. But in the past 50 years justification of the effectiveness of health care interventions has attained a new prominence. Evidence, at least notionally, now lies at the heart of health care policy and practice. This article provides an overview of the generation and use of evidence on effectiveness in health care. It explains why rigorous methodologies have taken hold and describes the major preoccupation with trying to ensure that research evidence has an impact on clinical practice. The strengths and weaknesses of evidence-based health care are explored to identify the opportunities for profitable transfer of experience across the public sector.     

汇率沟通、实际干预与人民币汇率变动——基于结构向量自回归模型的实证分析

近年来,汇率沟通已成为货币当局一个重要的货币政策工具。本文评估了汇率沟通在人民币汇率变动中的效力,并就其效力与实际干预的效力进行了比较。经验结果表明:汇率沟通时滞短,能使汇率朝着货币当局合意的方向变化,且汇率沟通冲击对人民币汇率变动的解释力较强;然而实际干预时滞较长,其效力明显弱于汇率沟通,对汇率变动的解释力弱。这两种政策工具的差别表明,汇率沟通在汇率市场是个有效的货币政策工具。     

Can ethics be taught in accounting?

This paper extends the work of accounting educators and researchers who have sought to develop and implement effective ethics interventions in the accounting curriculum. Its purpose is to assess the influence of ethics interventions, integrated into a one-semester introductory auditing course at both the undergraduate and graduate level, on the moral development and ethical behavior of accounting students. Ethics interventions were based on the review and discussion of ethics cases following a well known pedagogical framework over the first 10 weeks of one academic semester. The effectiveness of these interventions was tested two ways. First, using the Defining Issues Test (DIT) and a pre/post-test research design, the moral development of accounting seniors and graduate students in four separate auditing classes was assessed. Second, students' unethical behavior, defined as excessive “free-riding” on an economic-choice experiment based on the Prisoners' Dilemma, was observed by the researcher. In summary, results of this study show that ethics interventions did not cause accounting students' level of ethical reasoning to develop (increase) and did not curtail students' free-riding behavior. Findings also provide evidence of an association between ethical reasoning and students' economic choices, where students with relatively low and high levels of ethical reasoning were most likely to engage in free-riding. The implications of these findings are discussed in the last section of the paper.     

Critical Accounting Interventions

Starting from prior research on the functioning of intellectuals, the current study examines two questions: first, how can we intervene in social struggles in a manner that takes advantage of our expertise and offers the greatest potential for transforming and improving social practices? and second, how do we, as “intellectuals", judge the effectiveness or success of an intervention, given that the means used to effect change could well have a bearing on our legitimacy, on the very definition of “intellectual", and on our long-term efficiency. Using two case studies, we analyze the functioning of accounting within public policy struggles, and theoretically interrogate the interventions and the resultant outcomes. Although we acknowledge that the specific terrain of struggle varies, insights from these two episodes extend our understandings of accounting’s role within social conflict and perhaps, more importantly, encourage critical accountants to reintegrate the theoretical and praxis components of accounting scholarship through interventions in the public sphere.     

A shot in the arm: Economic support packages and firm performance during COVID-19

We use firm-level data to provide some early evidence on the effectiveness of COVID-19 economic policy packages. Our empirical strategy relies on the varying degree of vulnerability to the pandemic across industries. We find a robust association of fiscal support with changes in firm performance indicators (as measured by sales-to-assets ratio, profit margin, interest coverage ratio as well as probability of default) in pandemic-prone sectors. We also observe marginal effects of monetary policy on the sales-to-assets ratio and of foreign exchange intervention on the interest coverage ratio in the hardest-hit firms. These results broadly survive a battery of exercises to address endogeneity. Additionally, we show that firms with a better financial position are more likely to take advantage of the support packages to withstand the pandemic shock. Overall, this preliminary evidence suggests that policy interventions have bought time for the hardest-hit industries, by supporting turnover and improving liquidity.     

Central bank intervention and exchange rate volatility — Australian evidence

This paper examines the key characteristics of foreign exchange intervention by the Reserve Bank of Australia in the period 1983–1997, which can be broken into five distinct phases. We investigate the changing effectiveness of daily intervention on the $US/$A exchange rate by decomposing the exchange rate response to the intervention into various separate components. We find contemporaneous positive correlation between the direction of intervention and the conditional mean and variance of exchange rate returns. We show that sustained and large interventions have a stabilising influence in the foreign exchange market in terms of direction and volatility. Without these interventions, the market would have moved further and exhibited more volatility.     

New development: The paradox of outcomes—the more we measure,the less we understand

The use of ‘outcomes’ as a concept to measure the effectiveness of social policy interventions is inherently flawed and creates unwelcome paradoxes. This article explains why, instead of improving the lives of those who receive support, a focus on outcome information distorts both the priorities and practice of organizations who deliver such support, resulting in poorer results for those most in need. It provides an important first stage towards the evolution of new ways of conceptualizing ways to create improvements in social policy delivery.     

An examination of contextual factors and individual characteristics affecting technology implementation decisions in auditing

While computer-assisted audit techniques (CAATs) have the potential to increase efficiency and effectiveness of audit engagements, research in this area suggests that such techniques are under-utilized in public accounting. We propose that this condition is due to performance evaluation pressure and the use of budgets for multiple purposes, which result in the misalignment of firm and individual employee goals. We apply technology acceptance and budgeting theories to test this contention as well as potential organizational strategies for reducing the impediments to technology acceptance in the audit profession.Results from an experiment with experienced auditors suggest that firms have the ability to influence the implementation of new technology by using longer-term budget and evaluation periods and by communicating the approval of remote superiors regarding the software. In the absence of such firm interventions, the individual characteristics of the auditor (risk-aversion and perceptions of budgetary pressure) determine implementation decisions. Specifically, risk-seeking individuals are more likely to implement technology regardless of budget pressure perception, but for risk-averse individuals the decision to implement is positively related to perceived budget pressure.     

How Powerful Is Unannounced,Sterilized Foreign Exchange Intervention?

Though most central banks actively intervene on the foreign exchange market, the literature offers mixed evidence on their effectiveness: particularly for unannounced interventions. We use new, declassified data from the archives of the Bank of England and the institutional features of the Bretton Woods Era to estimate the effects of intervention on the exchange rate. We find that a purchase of pounds equivalent to 1% of the money supply causes a statistically significant, 4–5 basis point appreciation in the pound.     

Financial Frictions,Investment Delay,and Asset Market Interventions

We construct a dynamic macro model to incorporate financial frictions and investment delay. Investment is undertaken by entrepreneurs who face liquidity frictions in the equity market and a collateral constraint in the debt market. After calibrating the model to the U.S. data, we quantitatively examine how aggregate activity is affected by a shock to equity liquidity and a shock to entrepreneurs' borrowing capacity. We then analyze the effectiveness of government interventions in the asset market after such financial shocks. In particular, we compare the effects of government purchases of private equity and of private debt in the open market. In addition, we examine how these effects of government interventions depend on the option to delay investment.