The pricing of real estate investment trust initial public offerings

This paper examines the pricing of Initial Public Offerings (IPOs) of Real Estate Investment Trusts (REITs). Unlike standard corporations, evidence suggests that REIT IPOs are correctly priced in the initial market. Significant negative initial-day return for mortgage REITs is found to be a function of using the bid price to calculate returns for those securities, which trade initially over the counter (OTC). If the bid-ask average or the ask price is used in calculating returns, any apparent overpricing disappears. Additionally, we find that once transactions costs are considered, an investor is better off purchasing a REIT on the offering.     

Evidence of Forward-Looking Loan Loss Provisioning with Credit Market Information

Our paper makes a fundamental contribution by studying loan loss provisioning over the credit cycle as three distinct phases. Looking at the three distinct phases of the financial crisis – the pre-crisis period, crisis period, and post-crisis period – is important as loan loss provisioning is driven by different factors in each, in part due to extensive shifts in (or in the application of) regulatory rule. Controlling for credit market information using data from the Senior Loan Officer Opinion Surveys (SLOOS) we extend the work of previous studies of forward-looking loan loss provisions using the delayed expected loss recognition approach. We contribute to the growing literature on forward-looking loan loss provisioning and early in the cycle loss recognition by incorporating a broader range of available credit information and explicitly controlling for structural breaks in the sample corresponding to the financial crisis.     

Islam’s Gift: An Economy of Spiritual Development

According to the standard narrative, economics is an objective and scientific study of universal laws applicable to economic affairs of modern societies. After a brief introduction, the second section of the article presents a counter‐narrative that disputes this claim, and provides an alternative point of view that situates modern economics within its European historical, political, and social context. We briefly discuss why the conventional methodology of modern economics makes false claims to objectivity and universality. The third section provides an alternative methodology that is based on the recognition that human behavior is inherently and unavoidably normative, and any study of human beings and societies must take this into account. The fourth section of the article brings out the norms concealed within the foundations of modern economics, since the avowed methodology does not permit explicit and open expression of these norms. The fifth section describes Islamic views that describe the normative ideals for our personal and social lives. In particular, Islam aims at the development of the potential for excellence that every human being is born with. It does not aim at accumulation of wealth and material possessions. Nor does it aim at achievement of happiness through the maximization of pleasure achieved by consumption. The sixth section describes the transformational strategies required for spiritual progress in different dimensions of our human existence. The seventh section describes some of the institutional structures required in the economic realm to assist in the achievement of the transformation towards the normative ideals. The final section explains how we should use our unique and precious lives to aim for higher goals than mere consumption of goods and acquisition of wealth.     

Microfinance and missing markets

The existing theoretical analysis of microfinance focuses on the nature of the loan contract such as group liability. We draw attention to the role of missing or imperfect labour markets in understanding some of the important “second generation” debates in microfinance. Our analysis helps explain a number of puzzles in microfinance including high repayment rates with high interest rates, difficulties in scaling up projects, limited economic impact on borrowing households, low take‐up rates in recent microcredit programs, conflicting views about the interest rate elasticity of demand, and spurious mission drift. Microcredit can play a role when labour markets are underdeveloped, but it may also hinder structural transformation.     

Dynamic linkages between tourism transportation expenditures,carbon dioxide emission,energy consumption and growth factors: evidence from the transition economies

Tourism transport profoundly affects economic growth, energy consumption and carbon dioxide emissions. This study is an attempt to examine the impact of international tourism transportation expenditures, energy demand, foreign direct investment inflows, trade openness and urban population on carbon dioxide emission and per capita income for the panel of 11 transition Economies, over the period of 1995–2013. The results show that per capita income escalates the carbon dioxide emission (CO₂), which deteriorates the natural environment. International tourism receipts and international tourism expenditures for travel items are associated with the intensifying CO₂ emission and per capita income in the region. The study confirmed the energy-led emissions, FDI-led emissions, FDI-led growth, income-led emissions, income-led energy demand, trade-led growth and trade-led energy demand. The causality results further substantiate the the tourism-led growth and FDI hypothesis in the region. Finally, the variance decomposition analysis confirmed the following results, that is, (i) per capita income is the contributor that least influences CO₂ emissions, (ii) urban population influences per capita income and (iii) international tourism transportation expenditures will influence CO₂ emissions and per capita income for the next 10-year period.     

Aggregate insider trading: Contrarian beliefs or superior information?

We decompose realized market returns into expected return, unexpected cash-flow news and unexpected discount rate news to test the relation between aggregate market returns and aggregate insider trading. We find that (1) the predictive ability of aggregate insider trading is much stronger than what was reported in earlier studies, (2) aggregate insider trading is strongly related to unexpected cash-flow news, (3) market expectations do not cause insider trading contrary to what others have documented, and (4) aggregate insider trading in firms with high information uncertainty is more likely to be associated with contrarian investment strategy. These results strongly suggest that the predictive ability of aggregate insider trading is because of insider’s ability to predict future cash-flow news rather than from adopting a contrarian investment strategy. These results hold even after we control for non-informative trades and information uncertainty.     

Failures of the “Invisible Hand”

Despite many failures of the invisible hand both empirically and theoretically, it continues to be vigorously asserted and widely believed. We document the failures and explain why it continues to be asserted despite these failures.     

A Study of the Informal Interactions between Audit Committees and Internal Auditors in Australia

This paper finds evidence for the growing importance of informal interactions between the internal audit function and the audit committee (AC) in Australia – a relatively unexplored topic in the literature – using a survey of Chief Audit Executives (CAEs). It also describes the nature of these informal interactions. The most innovative elements of this paper are the findings that certain personal characteristics of CAEs, the specific knowledge and expertise of the AC chair, as well as some of the AC chair's personal characteristics are associated with the existence (and increase) of informal interactions.     

Management quality and the cost of debt: Does management matter to lenders?

This paper investigates the effect of organizational capital, typified by various management practices within a firm, on the cost of external debt financing. Using a sample of medium-sized manufacturing firms in the US, we find that better management practices enhance a firm’s external financing capacity by lowering the firm’s cost of bank loans. We do not find any evidence that the lower loan cost of a high-quality-management firm is associated with more restrictive non-price contract terms such as greater collateral requirements and stricter covenants. These results suggest that banks explicitly take into account the risk arising from poor management practices when pricing and designing debt contracts.     

RETRACTED: Distributional effects of rising food prices in Pakistan: Evidence from HIES 2001–02 and 2005–06 survey

This article has been retracted: please see Elsevier Policy on Article Withdrawal (http://www.elsevier.com/locate/withdrawalpolicy).This article has been retracted at the request of the Editor and the Publisher.After a thorough investigation, the Publisher has concluded that the Editor was misled into accepting this article based upon the positive advice of at least one faked reviewer report. The report was submitted from a fictitious email account which was provided to the Editor by the corresponding author during the submission of the article. The corresponding author, Dr Zaman, wishes to admit sole responsibility and to state that his co-authors were not aware of his actions.This manipulation of the peer-review process represents a clear violation of the fundamentals of peer review, our publishing policies, and publishing ethics standards. Apologies are offered to the reviewers whose identities were assumed and to the readers of the journal that this deception was not detected during the submission process.