Accounting and the environment

Introducing a discussion of some of the ways in which accounting and other calculative mechanisms are involved in environmental matters, the article focuses on a number of questions that emerge from accounting for carbon emission permits and corporate environmental reporting. Both are areas where there is already a need for more research and where that need will increase in the coming years. Identifying some of the interests and pressures that already influence approaches in the area, the case is made for the need for both critical and facilitative research.     

Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing

Following the approach of Berndt, Fuss, and Waverman, a dynamic model for U.S. cigarette manufacturing is developed and factor demands estimated. Tobacco and capital stocks are treated as quasi-tixed inputs. The results indicate that there are significant adjustment costs associated with adjusting tobacco stocks, but not with adjusting the capital stock. Short-run, intermediate-run, and long-run output constant elasticities are estimated for inputs in cigarette production. Demand for U.S. tobacco by U.S. cigarette manufacturers is found be more inelastic than shown by previous studies using static models. Cigarettes produced for export appear to differ in their marginal cost of production from cigarettes produced for the sale in the U.S. market.     

What Is in a Municipal Bond Rating?

Studies on the determinants of municipal bond ratings contain two conspicuous patterns: the use of financial accounting variables and the application of discriminant analysis to them. Over 70 different financial accounting variables have been specified, leading to different findings across the studies. In addition, discriminant analysis has been applied in these studies without correcting for violations of its underlying assumptions. Akaike's information criterion and Lachenbruch's U method are used to show how a probit model specified with economic base diversification, economic expansion, and fiscal management variables may be an improvement over the application of discriminant analysis to financial accounting variables in the determination of a triple A bond rating.     

A theory of bank regulation and management compensation

We show that concentrating bank regulation on bank capital ratiosmay be ineffective in controlling risk taking. We propose, instead,a more direct mechanism of influencing bank risk-taking incentives,in which the FDIC insurance premium scheme incorporates incentivefeatures of top-management compensation. With this scheme, weshow that bank owners choose an optimal management compensationstructure that induces first-best value-maximizing investmentchoices by a bank's management. We explicitly characterize theparameters of the optimal management compensation structureand the fairly priced FDIC insurance premium in the presenceof a single or multiple sources of agency problems.     

POTENTIAL GAINS FROM THE ENCLOSURE OF COMMON LAND: A REPLY

This reply outlines the experience underlying the assumptions in the previous note by Baxter and Bottomley, referring particularly to conditions in Tripolitania. There is no dispute that increases in gross rural product can be expected from the enclosure of common land. It is argued in this reply that this will be accomplished by a migration of labour and capital to the hitherto commonly held land, while Baack's model leads him to suppose the opposite. Baack's theory is used to show that the authors of the original note would still be right if dynamics were introduced into the analysis. It is agreed that Baack's analysis can be used to make the assumptions upon which the origibal note was based more precise as well as to add an additional source of gain not previously considered.