Trading imbalances,predictable reversals,and cross-stock price pressure

We test the implications of a multi-asset equilibrium model in which a finite number of risk-averse liquidity providers accommodate non-informational trading imbalances. These imbalances generate predictable reversals in stock returns. An imbalance in one stock also affects the prices of other stocks. The magnitude of the cross-stock price pressure depends on the correlations of the stocks’ underlying cash flows. The model implies that non-informational trading increases the volatility of stock returns. We confirm the model's implications using data from the Taiwan Stock Exchange.     

Incentives and invention in universities

We show that universities in the United States that provide stronger royalty incentives to faculty scientists generate greater license income, controlling for university characteristics. We use pre‐sample data on university patenting to control for the potential endogeneity of royalty shares. Faculty responds to royalties both in the form of cash and research lab support, indicating both pecuniary and intrinsic research motivations. The impact of incentives is larger in private than in public universities, and we provide new survey evidence on the organization and objectives of university licensing offices to explain this difference. Royalty incentives work both by raising faculty effort and sorting scientists across universities. The primary impact of incentives is to increase the quality rather than the quantity of inventions.     

Who Charges More: Hedge Funds or Mutual Funds?*

Explicit mutual fund fees are typically less than 1% of the assets under management. By comparison, the typical hedge fund charges a base fee of 2% plus a performance fee equal to 20% of net profits. Thus, hedge funds appear to charge far more for even comparable performance—unless one takes account of the following:

• ? For most mutual funds, a very high percentage of performance is driven by its passive exposure to the market, even though the fee is applied to the total fund.
• ? Many hedge funds are designed to provide returns that are completely independent of market performance.

Using these two assumptions, the author provides a simple example that shows that a representative mutual fund's performance can be replicated by combining an index fund, which represents the mutual fund's passive component, with a hedge fund, representing the mutual fund's active component. When analyzed in this way, the fee of the combined fund turns out to be remarkably close to the actual fee of the mutual fund. This in turn suggests that the implicit fee for the mutual fund's small active component is comparable to the fees of the hedge fund.     

Litigation Patterns in Automobile Bodily Injury Claims 1977–1997: Effects of Time and Tort Reforms

This study uses data from the Insurance Research Council to investigate changes in the use of attorneys and in the filing of legal claims to resolve automobile third‐party bodily injury claims between 1977 and 1997. We find results consistent with the general public perception that the use of attorneys and the filing of legal claims have increased over the study period. In addition, we find evidence that tort reforms enacted by the states have slowed the rates of increase in the use of attorneys and in the filing of legal claims to resolve automobile insurance claim disputes.     

Can the circle be squared? An enquiry into shale gas mining in South Africa's Karoo

The prospect of ‘fracking’ for shale gas in South Africa's Karoo has generated heated exchanges in public forums and in the media. This article seeks to understand why common ground in the debate has proved to be so elusive. The article divides the parties to the impasse into three camps and examines the ethical positions which seem to inform each faction's standpoint. The article finds that the tensions between the main protagonists’ positions are due to two related ethical ‘faultlines’. The first revolves around the inherent incompatibility of consequentialism with moral absolutism. The second relates to tensions between nature as an instrumental good, and an ethic that treats nature as an intrinsic good. The discussion considers the merits of cost–benefit analysis and whether, at the very least, exploration for shale gas should be permitted. The article concludes by weighing up the preconditions for a rapprochement being reached between the contending factions.     

Land change variability and human-environment dynamics in the United States Great Plains

Land use and land cover changes have complex linkages to climate variability and change, biophysical resources, and socioeconomic driving forces. To assess these land change dynamics and their causes in the Great Plains, we compare and contrast contemporary changes across 16 ecoregions using Landsat satellite data and statistical analysis. Large-area change analysis of agricultural regions is often hampered by change detection error and the tendency for land conversions to occur at the local-scale. To facilitate a regional-scale analysis, a statistical sampling design of randomly selected 10 km × 10 km blocks is used to efficiently identify the types and rates of land conversions for four time intervals between 1973 and 2000, stratified by relatively homogenous ecoregions. Nearly 8% of the overall Great Plains region underwent land-use and land-cover change during the study period, with a substantial amount of ecoregion variability that ranged from less than 2% to greater than 13%. Agricultural land cover declined by more than 2% overall, with variability contingent on the differential characteristics of regional human-environment systems. A large part of the Great Plains is in relatively stable land cover. However, other land systems with significant biophysical and climate limitations for agriculture have high rates of land change when pushed by economic, policy, technology, or climate forcing factors. The results indicate the regionally based potential for land cover to persist or fluctuate as land uses are adapted to spatially and temporally variable forcing factors.     

The out-of-sample success of term structure models as exchange rate predictors: a step beyond

A large literature suggests that standard exchange rate models cannot outperform a random walk forecast and that the forward rate is not an optimal predictor of the spot rate. However, there is evidence that the term structure of forward premia contains valuable information for forecasting future spot exchange rates and that exchange rate dynamics display nonlinearities. This paper proposes a term-structure forecasting model of exchange rates based on a regime-switching vector equilibrium correction model which is novel in this context. Our model significantly outperforms both a random walk and, to a lesser extent, a linear term-structure vector equilibrium correction model for four major dollar rates across a range of horizons.     

Conversations Across Continents: Teaching Business Ethics Online

The paper focuses on an online business ethics course that three professors (Painter-Morland, Fontrodona and Hoffman) taught together, and in which the fourth author (Rowe) participated as a student, from their respective locations on three continents. The course was conducted using Centra software, which allowed for synchronous online interaction. The class included students from Europe, South Africa and the United States. In order to assess the value of synchronous online teaching for ethics training, the paper identifies certain knowledge, skills and capacities that are crucial to the moral development process within individuals. The paper argues that the online teaching method succeeds in creating an environment within which important ethical knowledge and skills might be developed. It provides an in-depth reflection on the advantages and dis-advantages of online teaching and proposes improvements on the way forward. One of the major advantages relates to its ability to facilitate cross-cultural discussion and debate on ethical issues and foster insight into contextual influences on ethics management within an international arena.