Risk aversion in agricultural water management investments in Northern Ghana: experimental evidence

Sub‐Saharan Africa (SSA) is one of the regions in the world most affected by food price volatility and production variability. Poor small‐scale farmers in this region are particularly vulnerable to this variability. As a result, households may be reluctant to adopt new agricultural water management (AWM) technologies when they involve more risk than what they mitigate. Despite risk's role in AWM investments, there have been few attempts to estimate the magnitude and nature of risk aversion in relation to this type of farm decisions. To partially close this gap, this article uses an experimental approach applied to 137 households in Northern Ghana. We find that more than 70% of households are moderately or slightly risk averse. This contrasts with other studies in SSA, where most household decision‐makers exhibit severe to extreme risk aversion. We also find that households that stand to lose as well as gain something from participation in games are less risk averse than households playing gains‐only games. This result suggests that most farmers’ current wealth put them at risk of falling into a poverty trap. Thus, the losses from the riskiest investments on AWM technologies may fall more heavily on the poor, suggesting that additional efforts be given to the creation of viable insurance mechanisms.     

Understanding the changes in accounting thought

Financial accounting and reporting are in the midst of one of the most significant revolutionary changes in modern history. The purpose of this paper is to provide a framework that will contribute to the dialogue surrounding these developments. We use Kuhn’s [Kuhn, T. S. (1970). The structure of scientific revolutions. Chicago, IL: The University of Chicago Press] framework on the theory of scientific revolution to describe how changes in the need for information, coupled with the lack of relevant accounting information, led to reporting anomalies that have spurred a revolutionary shift in accounting paradigms. We are moving from an accounting paradigm that existed in the age of an industrial economy to an accounting paradigm that fits the economy in an information age. This redirection has resulted in the following: a change in the conceptualization and application of relevance and reliability, an increased use of fair value versus historical cost measurements, a renewed emphasis on principles versus rules, and an evaluation of the composition of the basic financial statements.     

Owners on both sides of the deal: mergers and acquisitions and overlapping institutional ownership

Using a corporate governance lens, this study considers owners with a stake in both the acquiring and the target firms in the context of mergers and acquisitions. A possible agency problem arises with regard to monitoring implications as managers may be able to take advantage of compromised monitoring because overlapping owners may focus on the aggregate value for both the acquiring and the target firms and nonoverlapping owners may be interested only in the acquirer's side of the deal. The results suggest that when more owners overlap in their ownership of both the acquiring and target firms, the acquiring firms are more likely to experience decreased shareholder value through merger and acquisition deals. This effect, however, can be constrained by stronger board control. Copyright © 2010 John Wiley & Sons, Ltd.     

Patent Rights and Trade: Analysis of Biological Products, Medicinals and Botanicals, and Pharmaceuticals

This article analyzes the effects of foreign patent rights on U.S. bilateral exports. The empirical analysis covers three highly disaggregated drug industries over three decades. We estimate bilateral trade equations for each industry using cross-country data on the strength of national patent rights. The findings show that strong foreign patent rights enhance the market power of U.S. drug exporters across countries with weak imitative abilities. Alternatively, strong foreign patent rights stimulate the market expansion of U.S. drug exports across countries with strong imitative abilities. These effects are larger in magnitude during the 1980–90s relative to the 1970s.     

Discussion of Who Is My Peer? A Valuation‐Based Approach to the Selection of Comparable Firms

Bhojraj and Lee present a new approach to deriving warranted valuation multiples and selecting comparable firms. Conference participants' comments centered on two key issues. First, participants questioned the motivation for deriving warranted valuation multiples and selecting comparable firms. Second, participants questioned the procedure through which valuation theory was incorporated in the valuation multiple forecasting process.     

Petrick,J.A. and Qulnn,J.F., Management Ethics: Integrity at Work

Teaching Business Ethics -     

A model of the federal funds market

Summary This paper develops a stochastic general equilibrium model of the federal funds market that incorporates non-Fisherian effects on interest rates stemming from both supply and demand shocks to reserves. Such a model may reconcile the widespread belief in a liquidity effect of money supply shocks with the difficulty many researchers have had in finding empirical support for such an effect. The model also cautions against interpreting the observed negative correlation between the federal funds rate and innovations to nonborrowed reserves as empirical confirmation of the ability of the Federal Reserve to lower short-term real interest rates.This paper should not be interpreted as reflecting the views of the Board of Governors of the Federal Reserve System or its staff. We gratefully acknowledge lengthy discussions and correspondence with V. V. Chari, Marty Eichenbaum, and especially Larry Christiano, that helped to clarify many issues. We were told many institutional details by Jim Clouse and Josh Feinman, and we received many helpful comments from David Altig, Michael Dotsey, and participants at the conference on Recent Research on the Liquidity Effect of Monetary Policy, 1993, Federal Research Bank of Cleveland, the conference on Recent Macroeconomic Research: Lessons for Policymaking, 1993, Federal Reserve Bank of Atlanta and the conference on Operating Procedures and the Conduct of Monetary Policy, 1992, Federal Reserve Bank of St. Louis.