Collective Redress: A Breakthrough or a Damp Sqibb?

In June 2013, the European Commission issued its long-awaited policy on collective redress. The proposal is in fact about collective actions and omits a holistic assessment of other options for redress. The proposal is a Recommendation not a proposed legislation. A related proposed Directive on competition damages does not mention collective actions. The proposed framework is not a model as too many aspects remain subject to national rules and contexts. Empirical evidence from collective actions in Member States suggests that this does not herald a new dawn for litigation or redress, although it may fuel more litigation in some Member States and thus forum shopping. In threatening to introduce legislation unless Member States introduce collective actions for all types of claim, the Commission opposes the majority of the Council and seems to have overplayed its hand.     

Reporting public sector financial results

Part of the process of recent public sector reform has involved replacing traditional cashbased accounts with accrual-based financial statements, similar to those found in the private sector. This article examines the use of accrual-based accounting in the public sector and provides examples from the UK National Health Service of situations where the accruals system may be deemed inappropriate. It shows that one possible response is to withdraw from the accruals mode and revert to cash measures, deeming the accruals adjustments to be ‘merely technical’. An alternative response is to change the mode of operating so that the cash impact of a transaction matches its accruals reporting impact. The conclusion is that there are modifications to public sector accounting practices away from those of the private sector that undermine the metaphor of running the public sector ‘like a business’.     

THE EFFECT OF SELF-TENDER OFFERS ON EARNINGS EXPECTATIONS

We examine financial analysts' earnings revisions after self-tender offers. Consistent with the assertions of earlier studies that self-tender offers signal future performance, financial analysts significantly increase their forecasts of earnings for firms that announce self-tender offers. However, the revisions differ based on the method chosen to repurchase shares. For Dutch auction offers, analysts significantly revise their estimates of short-term earnings only. For fixed-price tender offers, analysts increase both short-term and long-term earnings estimates. Also, long-term earnings revisions are significantly related to announcement-period abnormal returns for fixed-price tender offers, which suggests that fixed-price self-tender offers convey more positive information about future earnings than do Dutch auction offers.     

Does Information Asymmetry Explain The Diversification Discount?

We examine the diversification discount while controlling for differences in information asymmetry between diversified and nondiversified firms. We show that both diversified and nondiversified firms with higher levels of information asymmetry have discounted firm values relative to firms with lower levels of information asymmetry, although a diversification discount remains at all levels of information asymmetry. Fixed‐effect Fama‐MacBeth regressions confirm the existence of a statistically significant relation between information asymmetry proxies and excess value, but they also show that a significant diversification discount remains after controlling for differences in information asymmetry and other firm characteristics discussed in earlier studies (e.g., size, profitability, leverage, and capital constraint).