Original Issue High Yield Bonds: Aging Analyses of Defaults,Exchanges, and Calls

This paper presents an aging analysis of 741 high yield bonds and finds default, exchange, and call percentages substantially higher than reported in earlier studies. By December 31, 1988, cumulative defaults are 34 percent for bonds issued in 1977 and 1978 and range from 19 to 27 percent for issue years 1979–1983 and from 3 to 9 percent for issue years 1984–1986. Exchanges are also a significant factor although they often are followed by default. Moreover, a significant percentage of high yield debt, 26–47 percent for 1977–1982, has been called. By December 31, 1988, approximately one third of the bonds issued in 1977–1982 has defaulted or been exchanged, and an additional one third had been called. On average, only 28 percent of these issues are still outstanding. There is no evidence that early results for more recent issue years differ markedly from issue years 1977 to 1982.     

Does the Stock Market Overreact to Corporate Earnings Information?

This paper tests whether the stock market overreacts to extreme earnings, by examining firms' stock returns over the 36 months subsequent to extreme earnings years. While the poorest earners do outperform the best earners, the poorest earners are also significantly smaller than the best earners. When poor earners are matched with good earners of equal size, there is little evidence of differential performance. This suggests that size, and not investor overreaction to earnings, is responsible for the “overreaction” phenomenon, the tendency for prior period losers to outperform prior period winners in the subsequent period.     

The Taylor Principle and Monetary Policy Approaching a Zero Bound on Nominal Rates: Quantile Regression Results for the United States and Japan

This paper offers a new approach that estimates the response of interest rates to inflation and the output gap at various points (quantiles) on the conditional distribution of interest rates. This offers an improvement on empirical estimates conducted only at the mean and also allows us to test the propositions that policy shows greater aggression to inflation in the reaction function in terms of a greater response coefficient as interest rates reach low levels, and increasing aggression as the lower bound is approached. We find support for the Taylor principle, a more aggressive response to inflation than under a Taylor rule, but no detectable evidence of increasing aggression as the zero lower bound is approached in the US and Japan.     

On the comparison of dollar-unit and stratified mean-per-unit estimators

Abstract. The paper discusses the findings reported by Smieliauskas (1986) and expands on them. It focuses on the dominance criterion for cost efficiency and on the usefulness of power curves for stratified mean-per-unit estimators. The analyses lead to the conclusions that: (1) while an audit plan which dominates another is associated with lower cost, a plan with lower cost does not necessarily dominate: (2) the distribution function of the t statistic becomes normal for sufficiently large samples, but the approach to normality is not necessarily uniform as sample size increases; (3) large sample size is required for nominal confidence levels to be a good approximation to the true confidence level, and the true confidence level can move temporarily farther from the nominal level as the sample size increases; and (4) the lack of reliability of ex ante power curves for the stratified mean-per-unit estimator makes it difficult to decide which power curve dominates. Résumé. Cet article discute des résultats publiés par Smielauskas (1986) et les extrapole. Il met l'accent sur le critère de dominance pour l'efficacité des coûts et sur l'efficacité des courbes de puissance pour les estimateurs de moyenne-par-unité stratifiée. Les analyses portent à conclure que: (1) même si un programme de vérification dominant par rapport à un autre est associé à un coût inférieur, un programme à coût inférieur n'est pas nécessairement dominant; (2) la fonction de distribution de la statistique t tend vers la normale pour des échantillons suffisamment grands, mais ce rapprochement vers la normalité n'est pas nécessairement uniforme à mesure que la taille de l‘échantillon devient plus grande; (3) un échantillon de grande taille est requis afin que les seuils de confiance “nominaux” constituent une bonne approximation du seuil de confiance “réel”, et le seuil de confiance “réel” peut s’éloigner temporairement du seuil de confiance “nominal” à mesure que s'accroît la taille de l‘échantillon; et (4) l'absence de fiabilité des courbes de puissance ex ante pour l'estimateur de moyenne-par-unité stratifiée rend ardue la sélection de la courbe de puissance dominante.     

Member–Union Relations and Union Satisfaction

This paper examines the importance of various facets of satisfaction with union representation in determining overall satisfaction with the union. Samples of union members from Iowa and Sweden are used in the analysis. The results clearly support the view that member–union relations is a major determinant of overall satisfaction with union representation.