Large‐Sample Evidence on Firms’ Year‐over‐Year MD&A Modifications

The Securities and Exchange Commission (SEC) has expressed concern about the informativeness of firms’ Management Discussion and Analysis (MD&A) disclosures. A firm's MD&A is potentially uninformative if it does not change appreciably from the previous year after significant economic changes at the firm. We introduce a measure for narrative disclosure—the degree to which the MD&A differs from the previous disclosure—and provide three findings on the usefulness of MD&A disclosure. First, firms with larger economic changes modify the MD&A more than those with smaller economic changes. Second, the magnitude of stock price responses to 10‐K filings is positively associated with the MD&A modification score, but analyst earnings forecast revisions are unassociated with the score, suggesting that investors—but not analysts—use MD&A information. Finally, MD&A modification scores have declined in the past decade even as MD&A disclosures have become longer; the price reaction to MD&A modification scores has also weakened, suggesting a decline in MD&A usefulness.     

Beyond Stratification: The Emerging Class Structure in Rural Russia

Using survey data from Russian villages, this article examines the development of a rural class structure in postcommunist Russia. It is argued that as a result of market reforms, social and economic relations have evolved beyond stratification, and that, rather, a rural class structure is emerging. Five measures of an emerging class structure are posited: income stratification, land holdings, capital stock, class consciousness, and shared attitudes and values. Focusing on upper and lower income strata, significant differences are documented for each measure. The economic and political implications of the findings are discussed.     

WELFARE LOSS OF WETLANDS DISINTEGRATION: A LOUISIANA STUDY

This study estimates the loss in welfare of projected Louisiana coastal wetlands disintegration. Various programs have initiated costly projects to terminate this disintegration process. But can these projects succeed, and will their benefits exceed their costs? This study addresses the benefits issues and estimates reductions in incomes and consumption opportunities and increases in costs that would be avoided if restoration and enhancement projects are successful. Estimated welfare losses that would be avoided do not include non-user and lifestyle losses, which may be very important, and they do not include the costs of dismantling coastal infrastructure. These exclusions make the estimates of this study minimum estimates of welfare losses. Future economic welfare losses represent a 1990 present value in a range between $5.9 and $24.3 billion, depending upon discount rates and whether low or high loss estimates are used. In order to make these estimates more meaningful, the implied wetlands values were calculated on a per acre basis. These values ranged from $8,437 to $15,763 per acre.     

The supply of services: an analysis of the British Gas Servicing Contract

This paper is based on a research project carried out for the National Gas Consumer Council, and is an independent assessment of the standard terms contained in the British Gas Servicing Contract — in particular the comprehensive parts and labour contract offered for a complete central heating system. The paper analyses certain clauses that have given rise to particular comment, for example, Clause 1 Period of Agreement, Clause 3 Annual Service, Clause 4 Breakdown in Service (spare parts). The conclusion drawn is that these clauses are notable for their one-sidedness, and that legislation giving rights to the consumer to challenge ‘unfair terms’ is insufficient to protect the consumer against large corporations. Additional safeguards suggested include a set of guidelines, an arbitration provision and better publicity.