The ubiquity of room taxes

This article examines the case for the imposition of room taxes and attempts to explain their ubiquity. The room tax is analysed using the main criteria for assessing taxes and is compared to property tax. The extent of room tax imposition is surveyed and the possibilities of evasion are discussed.     

Further evaluation of conglomerate performance

In the early years conglomerates were seen as the financial concept of the future. More recently their economic advantages have been seriously questioned. This article reviews the existing literature on conglomerate performance and extends the investigation through the early seventies. While conglomerates provide investors with less variability from market movements than do nonconglomerate firms, they provide less diversification than closed-end investment companies and mutual funds. Furthermore, risk adjusted performance measures of conglomerates did not differ significantly from those of other firms of portfolios. Thus, conglomerates should be viewed simply as another category of investments that plot along the security market line.     

An incomplete equilibrium with a stochastic annuity

Finance and Stochastics - We prove the global existence of an incomplete, continuous-time finite-agent Radner equilibrium in which exponential agents optimise their expected utility over both...     

The NAB foreign currency option losses in the context of a disaster myopia model

In this paper the author develops a model that expands on the ‘disaster myopia’ analysis of Guttentag and Herring and provides an eight-stage process which incorporates the ‘availability heuristic’ of Tversky and Kahneman. The eight-stage disaster myopia process might be recognised as a model which encapsulates the key elements of serious bank loss experiences. The model is shown to be consistent in explaining the earlier bank loss experiences such as Barings Bank and Daiwa Bank. In this paper this model is applied to the recent National Australia Bank (NAB) losses in currency option trading and suggestions are made as to how it might be used to improve the processes of corporate governance that appear to be unable to recognise problems early enough.     

Competition on the Nasdaq and the Impact of Recent Market Reforms

This paper examines the effect of recent market reforms on the competitive structure of the Nasdaq. Our results show that changes in inventory and information costs cannot explain the post-reform decrease in bid-ask spreads. We interpret this as evidence that the reforms have reduced Nasdaq dealers' rents. Additionally, we find that the difference between NYSE and Nasdaq spreads have been greatly diminished with the new rules. Further, the reforms have resulted in an exit, ceteris paribus , from the industry for market making. Overall, our results provide strong evidence that the reforms have improved competition on the Nasdaq.     

Returns to research and development in the us pharmaceutical industry

Research concerning the pharmaceutical industry rate of return has concentrated on two policy issues: (1) possible resource misallocation and (2) the drug innovation environment. Accounting returns are suspect for policy purposes, requiring attention to the role of, and impact on, expectations of returns. This paper uses evidence about expectations and about resource flows into R&D consistent with those expectations to infer the level of economic returns. Our results provide evidence of a decline in expected returns, with exit of firms and resources. Regulation may be one of the major causes of the adverse shift in prospective returns from R&D investments.     

Electronic Communication Networks and Liquidity on the Nasdaq

This paper examines the growth of electronic communication networks (ECNs) and their impact on the liquidity of Nasdaq stocks. I find that the recent growth of trading through ECNs has resulted in tighter bid-ask spreads, greater depths, and less concentrated markets. Overall, our results support the hypothesis that electronic communication networks have improved Nasdaq liquidity.     

ROI planning and control

Defects in the application of the ROI method of planning and control have been disclosed by its originator, du Pont, and by a study of firms that adopted the method relatively late. None of the errors, the author observes, is inherent in the ROI method; the central error is the confusion of goals and processes. Both businessmen and theorists have treated the firm's objectives as ends in themselves. ROI systems or other systems have been installed, and targets and standards used bureaucratically. Targets and standards should be viewed as instruments for engendering healthy adaptive learning processes in organizations. The ROI system can provide information on every element of the balance sheet, income statement, and other comprehensive performance statements, serving as a vehicle for dynamic communication, feedback, and adjustment.