Environmental performance and plant closure

This study uses a sample of plant closings as the testing stage to examine the financial consequences of variant environmental performance records and stakeholder pressure levels. It compares 117 manufacturing facilities closing down between 1998 and 2000 to 351 facilities surviving through this period, along four measures of environmental performance. It shows that in the ten years prior to closure, closing facilities reduce their toxics emissions relatively more and incur somewhat stronger community and regulatory pressures than surviving ones. The results persist through alternative versions of the model and suggest that the environmental performance of closing facilities is at least as good as that of surviving ones. The mix of environmental practices of closing facilities differs from that of surviving ones with the former engaging in significantly less recycling of waste than the latter. Closing facilities focus more on end-of-pipe measures while surviving ones engage in more pro-active strategies, consistent with evidence in the literature of a positive relation between pro-active environmental practices and performance. Stakeholder pressures, in some cases (e.g., in pollution intensive industries), may be associated with unrecoverable costs to facilities, including closure, depending on the environmental management choices of the facilities.     

Financial structure and the heterogeneous impact of monetary policy across industries

The two general channels by which monetary policy impacts output are the neo-classical cost of capital channel and the credit channel. This paper decomposes the output response to a change in the stance of monetary policy to each of these channels. We use a unique industry level data set that measures the financial characteristics of firms operating at the industry level through time. We bring these financial characteristics formally into the regression analysis, thus allowing for a more precise identification of the two channels. The evidence indicates that both channels are active in the Canadian economy.     

Misperceiving the value of information in predicting the performance of others

Economic models typically allow for “free disposal” or “reversibility” of information, which implies non-negative value. Building on previous research on the “curse of knowledge” we explore situations where this might not be so. In three experiments, we document situations in which participants place positive value on information in attempting to predict the performance of uninformed others, even when acquiring that information diminishes their earnings. In the first experiment, a majority of participants choose to hire informed—rather than uninformed—agents, leading to lower earnings. In the second experiment, a significant number of participants pay for information—the solution to a puzzle—that hurts their ability to predict how many others will solve the puzzle. In the third experiment, we find that the effect is reduced with experience and feedback on the actual performance to be predicted. We discuss implications of our results for the role of information and informed decision making in economic situations. Electronic Supplementary Material Supplementary material is available in the online version of this article at http://dx.doi.org/10.1007/s10683-006-9128-y. JEL Classification C91, D83     

Detecting log-periodicity in a regime-switching model of stock returns

Log-periodic precursors have been identified before most and perhaps all financial crashes of the Twentieth Century, but efforts to statistically validate the leading model of log-periodicity, the Johansen–Ledoit–Sornette (JLS) model, have generally failed. The main feature of this model is that log-harmonic fluctuations in financial prices are driven by similar fluctuations in expected daily returns. Here we search more broadly for evidence of any log-periodic variation in expected daily returns by estimating a regime-switching model of stock returns in which the mean return fluctuates between a high and a low value. We find such evidence prior to the two largest drawdowns in the S&P 500 since 1950. However, if we estimate a log-harmonic specification for the stock index for the same time periods, fixing the frequency and critical time according to the results of the regime-switching model, the parameters do not satisfy restrictions imposed by the JLS model.     

Crime,apprehension and clearance rates: Panel data evidence from Canadian provinces

The Becker model of crime establishes the importance of the probability of apprehension as a key factor in a rational individual's decision to commit a crime. In this respect, most empirical studies based on US data have relied on variation in the number of police officers to estimate the impact of the probability of apprehension or capture. We measure the probability of apprehension by clearance rates and study their effects on crime rates, employing a panel of Canadian provinces from 1986 to 2005. OLS, GMM, GLS and IV estimates yield statistically significant elasticities of clearance rates, ranging from ?0.2 to ?0.4 for violent crimes and from ?0.5 to ?0.6 for property crimes. These findings reflect the importance of police force crime‐solving productivity.     

Concepts and Indicators of Local Authority Performance: An Evaluation of the Statutory Frameworks in England and Wales

A conceptual framework for evaluating statutory performance indicators for local authorities is developed. The framework, which contains 14 dimensions of organizational performance, is then applied to the indicators set for local government from 1993/94 to 2001/02. The results show that the validity and comparability of the indicators has improved substantially over time. However, a critical weakness that remains is the absence of indicators that link spending with service outcomes. Such indicators are essential if judgements about value for money and Best Value are to be made.     

The relationship between expected utility and higher moments for distributions captured by the Gram–Charlier class

In this letter we derive the closed form solution for expected utility in terms of higher moments of the distribution of wealth when expected utility takes the CARA form and the distribution of wealth is captured by the Gram–Charlier class of distributions. We derive the condition under which positive skewness can be associated with a decrease in expected utility.