An Instructional Case Comparing the Accounting Policies and Financial Results of Online Retailers

In the role of financial analyst for a venture capital firm, you are assigned the responsibility of evaluating two online retailers who have applied for financing to build a distribution center in western Canada. Based on your developing knowledge of Canadian accounting standards for private enterprises (ASPE), you evaluate the financial reporting policies and financial results of the two companies to identify the company that is best suited for your firm's support. Through this case, you will refine your understanding of ASPE and you will exercise your reasoning and analytical skills.     

A Gravity Model of Mortality Rates for Two Related Populations

Abstract

The mortality rate dynamics between two related but different-sized populations are modeled consistently using a new stochastic mortality model that we call the gravity model. The larger population is modeled independently, and the smaller population is modeled in terms of spreads (or deviations) relative to the evolution of the former, but the spreads in the period and cohort effects between the larger and smaller populations depend on gravity or spread reversion parameters for the two effects. The larger the two gravity parameters, the more strongly the smaller population’s mortality rates move in line with those of the larger population in the long run. This is important where it is believed that the mortality rates between related populations should not diverge over time on grounds of biological reasonableness. The model is illustrated using an extension of the Age-Period-Cohort model and mortality rate data for English and Welsh males representing a large population and the Continuous Mortality Investigation assured male lives representing a smaller related population.     

Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds

Government-issued longevity bonds would allow longevity risk to be shared efficiently and fairly between generations. In exchange for paying a longevity risk premium, the current generation of retirees can look to future generations to hedge their systematic longevity risk. Longevity bonds will lead to a more secure pension savings market, together with a more efficient annuity market. By issuing longevity bonds, governments can aid the establishment of reliable longevity indices and key price points on the longevity risk term structure and help the emerging capital market in longevity-linked instruments to build on this term structure with liquid longevity derivatives.     

State limits in the early twenty‐first century: Observations on form and function

It is dangerous to draw too many conclusions about the form and function of state borders in the early twenty‐first century. Marked regional differences are developing and, with a few exceptions such as Europe, there is scarcity of empirical evidence about the changes taking place. Some trends, however, seem clear. There are likely to be more states and more land and maritime boundaries in future, and states will continue to regard the establishment and protection of their territorial limits as a priority. As the power and influence of states seem to diminish in response to globalisation, the reassertion of territoriality by governments is both legitimate and is often popular with the people. While many boundaries will become more permeable, some will remain as significant barriers to people and goods, although not to ideas and information on the Internet. Attention is drawn to the emerging political and economic blocs that may create striking regional contrasts in boundary form and function by mid‐century.     

Long memory and long run variation

A commonly used defining property of long memory time series is the power law decay of the autocovariance function. Some alternative methods of deriving this property are considered, working from the alternate definition in terms of a fractional pole in the spectrum at the origin. The methods considered involve the use of (i) Fourier transforms of generalized functions, (ii) asymptotic expansions of Fourier integrals with singularities, (iii) direct evaluation using hypergeometric function algebra, and (iv) conversion to a simple gamma integral. The paper is largely pedagogical but some novel methods and results involving complete asymptotic series representations are presented. The formulae are useful in many ways, including the calculation of long run variation matrices for multivariate time series with long memory and the econometric estimation of such models.     

A Cost Function Approach to Dynamic Duality: An Application to the US Cigarette Manufacturing Industry

The dynamic duality econometric approach with the case of multiple outputs is applied to the US cigarette manufacturing industry to test for the presence of adjustment costs and quasifixed inputs with regard to stocks of capital and tobacco. Capital and tobacco stocks are found to be quasi-fixed inputs and the empirical results indicate that there are significant adjustment costs associated with adjusting these inputs. Short- and long-run own- and cross-price elasticities of factor demands are estimated for domestic and imported tobaccoes, materials, tobacco stocks, and capital. Output demand elasticities are also estimated. The two outputs, cigarettes produced for export and for the US market, are examined for equality of marginal costs. No evidence of differences in marginal costs was found. There is evidence that government restrictions on advertising have negative effects on output demand.     

Dynamic effects of changes to Japanese immigration policy

This paper uses a single-sector dynamic stochastic general equilibrium model with heterogeneous households to analyse Japanese immigration policy. We examine the effects on output, consumption, factor prices, and utility. We do this for both steady states and transition paths. We find that: (a) aggregate output, investment, and consumption in Japan are likely to rise with any sort of loosening of immigration restrictions; (b) allowing more skilled immigration generates greater aggregate changes; (c) raising skilled immigration relative to unskilled immigration drives down skilled workers’ wages, consumption, and utility, while cutting the skilled to unskilled immigration share has the opposite effects; and (d) such immigration policy changes have small effects compared to those that occur naturally due to business cycle fluctuations     

Detecting Financial Collapse and Ballooning Sovereign Risk

This paper proposes a new model for capturing discontinuities in the underlying financial environment that can lead to abrupt falls, but not necessarily sustained monotonic falls, in asset prices. This notion of price dynamics is consistent with existing understanding of market crashes, which allows for a mix of market responses that are not universally negative. The model may be interpreted as a martingale composed with a randomized drift process that is designed to capture various asymmetric drivers of market sentiment. In particular, the model is capable of generating realistic patterns of price meltdowns and bond yield inflations that constitute major market reversals while not necessarily being always monotonic in form. The recursive and moving window methods developed in Phillips, Shi and Yu (2015a,b; PSY), which were designed to detect exuberance in financial and economic data, are shown to have detective capacity for such meltdowns and expansions. This characteristic of the PSY tests has been noted in earlier empirical studies by the present authors and other researchers but no analytic reasoning has yet been given to explain why methods intended to capture the expansionary phase of a bubble may also detect abrupt and broadly sustained collapses. The model and asymptotic theory developed in the present paper together explain this property of the PSY procedures. The methods are applied to analyse S&P 500 stock prices and sovereign risk in European Union countries over 2001–16 using government bond yields and credit default swap (CDS) premia. A pseudo real‐time empirical analysis of these data shows the effectiveness of the monitoring strategy in capturing key events and turning points in market risk assessment.     

Examining Social Networking Sites as a Survey Distribution Channel for Hospitality and Tourism Research

As businesses use social networking sites (SNS) to connect with consumers, SNS can be viewed as another way to collect users’ information. Since many consumers spend significant amounts of time connecting with others on SNS, it would be a suitable channel to gather information from the captured audience. This study compares survey responses from the traditional paper-and-pencil survey and online survey collected through an SNS recruitment method. The test results showed that there are no statistically significant differences in model fits from the two data collection methods. Thus, this study concludes that SNS holds great potential to serve as a survey distribution channel for collecting meaningful data. More in-depth empirical studies are needed to validate the method before using it for a wider range of research.