Did firms cut nominal wages in a deflationary environment?: Micro-level evidence from the late 19th and early 20th century banking industry

This paper examines wage adjustment in the late 19th and early 20th centuries using personnel records from the Union Bank of Australia and Williams Deacon’s Bank (England). During the period of this study there was steep and prolonged deflation. Firm-specific and industry-specific demand shocks also put downwards pressure on wages. Although it was common for individual wages at the banks to remain unchanged from year to year, wage cuts were very rare even for senior workers. Turnover at both banks was extremely low and, thus, despite flexibility in the wages of incoming workers, did not offset the effects of individual-level wage rigidity. Consequently real wages moved counter-cyclically.     

Multi-market trading and arbitrage

We measure arbitrage opportunities by comparing the intraday prices and quotes of American Depositary Receipts (ADRs) and other types of cross-listed shares in U.S. markets with synchronous prices of their home-market shares on a currency-adjusted basis for a sample of 506 U.S. cross-listed stocks from 35 different countries. Deviations from price parity average an economically small 4.9 basis points, but they are volatile and can reach large extremes. Price parity deviations and their daily changes are positively related to proxies for holding costs that can impede arbitrage, even after controlling for transactions costs and foreign investment restrictions.     

Determinants of Recidivism in Paroled Queensland Prisoners: A Comparative Analysis of Custodial and Socioeconomic Characteristics

A multinomial ordered probit model is used to predict post-release performance in a sample of Queensland prisoners released between January 1992 and December 1994. Post-release performance is defined in terms of the seriousness of parole breaches and/or reoffences over the length of the parole period or until April 1996. The paper examines the statistical significance of a number of custodial and socioeconomic variables on the likelihood of a parole breach or re-offence. Factors analysed include family composition, age, occupation, ethnicity, the number of events in custody, the number of prison violations and the length of sentence of the most recent custodial episode. All other things being equal, the marginal effects of readmission with respect to the set of explanatory variables varies markedly according to whether readmission is through a parole breach or through actual recidivist behaviour.     

RATCHET BONDS: MAXIMUM REFUNDING EFFICIENCY AT MINIMUM TRANSACTION COST

Callable bonds, which are widely used by corporate borrowers to manage interest rate risk, have several major drawbacks. Foremost is the transaction cost of refunding. In addition, poor execution—calling too early or too late—is common, causing a transfer of wealth from shareholders to bondholders.
The Ratchet bond captures the advantages of a callable bond—the ability to lower interest costs when rates decline—while eliminating its undesirable features. If rates fall after issuance, the coupon of a Ratchet bond automatically resets to the yield of a specified Treasury bond plus some fixed spread. The resulting "step-down" cash flow pattern resembles that of a sequence of callable bonds that are refunded to the same original maturity date.
The Tennessee Valley Authority was the first to use this innovative structure. In June 1998, they sold $575 million 6.75%"PARRS" with a 30-year maturity and annual rate resets beginning after five years. Moreover, as this article went to print, TVA announced its intent to sell another large Ratchet issue with features virtually identical to the PARRS described in this article.     

The role of the paid preparer in nonprofit reporting quality

The purpose of this paper is to examine whether the preparer of the Form 990 influences the Form 990 reporting quality. Currently, the Form 990 is the only widely available source of governance and financial information for nonprofit organizations. The leading rater of nonprofit organizations, Charity Navigator, relies primarily on information from the Form 990 in developing their ratings. We identify misreporting by utilizing five measures of reporting quality. We find organizations that hire an outside accounting firm to prepare the Form 990 report higher quality financial information than organizations that choose to prepare the Form 990 in house. Interestingly, the size of the accounting firm is not associated with the quality of Form 990 reporting with the exception that paid preparers who are sole proprietors are more likely to misreport. Further exploration reveals that paid preparers who file more returns are less likely to misreport indicating that specialization is associated with more accurate reporting on Form 990. Our study contributes to the literature by using multiple reporting measures to examine the impact of paid preparers on the reporting quality of 990s. Furthermore, our study is the first to consider how specialization affects the accuracy of 990 returns.     

Do WTO members have more liberal trade policy?

This paper uses 68 measures of trade policy and liberalization to ask if membership in the World Trade Organization (WTO) and its predecessor the General Agreement on Tariffs and Trade (GATT) is associated with more liberal trade policy. Almost no measures of trade policy are significantly correlated with GATT/WTO membership. Trade liberalizations, when they occur, usually lag GATT entry by many years, and the GATT/WTO often admits countries that are closed and remain closed for years. The exception to the rule is that WTO members tend to have slightly more freedom as judged by the Heritage Foundation's index.     

Analytics of sovereign debt restructuring

This paper develops a simple theoretical model to analyse recent proposals on restructuring of sovereign bonds. We find that collective action clauses (CACs) inserted in bonds resolve the inefficiencies caused by intra-creditor coordination problems providing that all parties have complete information about each other's preferences. In such a world, statutory mechanisms, such as international bankruptcy courts, are unnecessary. This is no longer the case when the benefits from reaching a restructuring agreement are private information to the debtor and its creditors due to inefficiencies caused by the debtor-creditor bargaining problem.     

An Empirical Examination of Institutional Investor Preferences for Corporate Social Performance

This study investigates the pattern of institutional shareholding in the U.K. and its relationship with socially responsible behavior by companies within a sample of over 500 UK companies. We estimate a set of ownership models that distinguish between long- and short-term investors and their largest components and which incorporate both aggregated and disaggregated measures of corporate social performance (CSP). The results suggest that long-term institutional investment is positively related to CSP providing further support for earlier studies by Johnson and Greening (1999, Academy of Management Journal 42, 564–576) and Graves and Waddock (1994, Academy of Management Journal 37, 1034–1046). Disaggregation of CSP into its constituent components suggests that the pattern of institutional investment is also related to the form which CSP takes. Investigation of the impact of investment screens on the selection of stocks suggests that long-term institutional investors select primarily through exclusion, rejecting those firms which have the worst CSP.