Small Capitalization Companies: What Does Financial Analysis Tell Us about Them?

The study considers a broad range of accounting information and ratios for a group of small and large companies from 1965 through 1980. It seeks to answer the following questions: Are the financial ratios of small companies significantly different from those of larger companies? Are these differences commensurate with relative stock market performance? What are the implications for investors who may wish to invest in small companies, either individually or through mutual funds specializing in the stock of small companies?     

Employment risk,compensation incentives,and managerial risk taking: Evidence from the mutual fund industry

We examine the influence on managerial risk taking of incentives due to employment risk and due to compensation. Our empirical investigation of the risk taking behavior of mutual fund managers indicates that managerial risk taking crucially depends on the relative importance of these incentives. When employment risk is more important than compensation incentives, fund managers with a poor midyear performance tend to decrease risk relative to leading managers to prevent potential job loss. When employment risk is low, compensation incentives become more relevant and fund managers with a poor midyear performance increase risk to catch up with the midyear winners.     

Constrained discretion in Sweden

We study whether the institutional adoption of inflation targeting (IT) has constituted both a policy and a macroeconomic switch in Sweden using the nonlinear MSVAR technique. We assess the relative weight put on inflation in the monetary reaction function and the capacity of IT to reduce macroeconomic uncertainty. We show that IT has constituted a policy switch to a lower focus on inflation, in contrast with the usual argument that has been put forth by IT opponents. Moreover, IT adoption is shown to have reduced uncertainty, through lower inflation and output variabilities simultaneously. Last, counterfactuals suggest IT provides higher monetary policy leeway.     

The synchronization of wage dynamics across EMU members. A test of the endogeneity hypothesis

We test the hypothesis of an endogenous currency area for the labor market of the Euro area: has the introduction of a common currency caused wage dynamics to become more synchronized and to be able to cushion for asymmetric shocks? Trade intensity, sector specialization and financial integration are tested for being the driving forces for the endogenous synchronization of wage dynamics. We use regression techniques with instrument variables, and find evidence of persistent asymmetries in nominal wage formation, despite a single currency and monetary policy. We explain the result with more specialization following financial integration, and with still existing differences in wage formation and labor market institutions. We conclude that the euro zone is not endogenous with respect to wage formation. Rather, there are incentives for beggar-thy-neighbor policies in the Euro area.