Accounting and capital markets: a survey of the European evidence

The relationship between accounting information and capital markets has been the subject of numerous studies, especially in the US. The purpose of this article is to examine the corresponding evidence in Europe. This review classifies the European literature into three groups: studies of the market reaction to newly released accounting information; studies of the long-term association between stock returns and accounting numbers; studies devoted to the use of accounting data by investors and to the impact of market pressure on accounting choices. The paper reviews and summarizes the main results related to each of these topics. It also addresses some methodological issues and provides suggestions for future research.     

Diaspora growth and aggregate remittances: an inverted-U relationship?

This paper presents a model in which remittances stem from a decision made jointly by a family coalition of multiple migrants and non-migrants, allowing two alternative interpretations: migrants’ altruism or bargaining power. The model predicts that aggregate remittances first increase, reach a maximum, and then decrease as the emigration ratio (migrants/non-migrants) increases. An alternative model of loan repayment arrangement between each migrant and her parents, predicts that aggregate remittances grow monotonously with the emigration ratio. Testing both predictions on a macroeconomic bilateral dataset we find evidence in favour of the first model and an inverted-U relationship between aggregate remittances and the emigration ratio, with a maximum reached at a value of 0.5. Since many small ‘MIRAB’ island nations are close to or even above this threshold value, this finding is highly relevant for them since they may experience declining aggregate remittances as the diaspora grows further.     

Notes

Editor's Note: The first issue of the Journal included an article by Miguel Kiguel of the University of Maryland on “The Choice of Appropriate Technology in a General Equilibrium Model”. The following is a critique of this article by Bernard Yeung, Department of Finance and Management Science, University of Alberta, Edmonton.     

Interpretation and Sustainable Tourism: The Potential and the Pitfalls

From the outset, proponents of sustainable tourism have, consciously or not, set great store by interpretation, and gradually the linkages between sustainable tourism and interpretation have begun to be developed. This discussion examines the potential benefits of linking interpretation and sustainable tourism and assesses a number of the pitfalls or difficulties which are involved. The potential benefits include improved visitor management, local economic and environmental gains and fuller community involvement. Among the several pitfalls of linking interpretation and sustainable tourism which are considered are the dangers of over-interpretation, intrusion, creating ‘quaint’ tourist landscapes, and those of elitism.     

A contemporary analysis of road traffic crashes,fatalities and injuries in Trinidad and Tobago

Road safety, in particular pedestrian safety, is a problem in Trinidad and Tobago. Data were derived from the database of the Traffic and Highway Patrol Unit of the Trinidad and Tobago Police Service. Road traffic crashes in Trinidad and Tobago are largely an urban problem. Four urban areas accounted for nearly three-quarters of reported road traffic crashes, fatalities and injuries. Pedestrians, passengers and drivers accounted for 93% of fatalities and 95% of injuries due to road traffic crashes in 2000. Pedestrians alone accounted for 42% of fatalities and 34% of injuries in 2000. Trends over time show that there has been a decline in fatality rates from 17 deaths per 100,000 population in 1960 to 10 deaths per 100,000 population in 2000, despite rapid motorization. Motorization increased four-fold from 63 registered vehicles per 1000 population in 1960 to 250 vehicles per 1000 population in 2000. In conclusion, effort should be intensified to ensure safety for all road users and, in particular, pedestrians, passengers and drivers. Improved data collection and operational research would improve monitoring and evaluation of policy interventions.     

Export entry and exit by German firms

Export Entry and Exit by German Firms. — While exports have played an important role in German business cycles, little is known about the export supply response of German firms. This paper presents a dynamic model of the export decision by a profit-maximizing firm. Using a panel of German manufacturing plants, we test for the role of plant characteristics and sunk costs in the entry decision. We find evidence for substantial sunk costs: exporting today by a plant increases the probability by 50 percent that the plant will export tomorrow. This advantage depreciates quickly, falling by two-thirds in a year. The authors also find evidence that plant success, as measured by size and productivity, increases the likelihood of exporting.