Limit order books and trade informativeness

In the microstructure literature, information asymmetry is an important determinant of market liquidity. The classic setting is that uninformed dedicated liquidity suppliers charge price concessions when incoming market orders are likely to be informationally motivated. In limit order book (LOB) markets, however, this relationship is less clear, as market participants can switch roles, and freely choose to immediately demand or patiently supply liquidity by submitting either market or limit orders. We study the importance of information asymmetry in LOBs based on a recent sample of 30 German Deutscher Aktienindex (DAX) stocks. We find that Hasbrouck's (1991) measure of trade informativeness Granger causes book liquidity, in particular that required to fill large market orders. Picking-off risk due to public news-induced volatility is more important for top-of-the book liquidity supply. In our multivariate analysis, we control for volatility, trading volume, trading intensity and order imbalance to isolate the effect of trade informativeness on book liquidity.     

Mandatory IFRS adoption and management forecasts: The impact of enforcement changes

We examine how concurrent enforcement changes affect the positive relationship between mandatory IFRS adoption and firms’ voluntary disclosure. We show that the increase in the issuance of management forecasts after IFRS adoption is smaller for firms from IFRS-mandating countries with concurrent enforcement changes than for those from countries without such changes. We find no difference in the increase of forecast informativeness between firms from IFRS-mandating countries without concurrent enforcement changes and firms from non-IFRS-mandating countries; however, firms domiciled in IFRS-mandating countries with concurrent enforcement changes exhibit a significantly smaller increase in forecast informativeness. Our findings suggest that better IFRS enforcement distinctly weakens (strengthens) the positive effect of IFRS adoption on voluntary (mandatory) disclosure.     

Life Expectancy in 2040: What Do Clinical Experts Expect?

We use expert clinical and public health opinion to estimate likely changes in the prevention and treatment of important disease conditions and how they will affect future life expectancy. Focus groups were held including clinical and public health faculty with expertise in the six leading causes of death in the United States. Mortality rates and life tables for 2040 were derived by sex and age. Life expectancy at age 20 and 65 was compared to figures published by the Social Security Administration and to estimates from the Lee-Carter method. There was agreement among all three approaches that life expectancy at age 20 will increase by approximately one year per decade for females and males between now and 2040. According to the clinical experts, 70% of the improvement in life expectancy will occur in cardiovascular disease and cancer, while in the last 30 years most of the improvement has occurred in cardiovascular disease. Expert opinion suggests that most of the increase in life expectancy will be attributable to the already achieved reduction in smoking rates, especially for women.     

Credit Constraints in Manufacturing Enterprises in Africa

We investigate the question of whether firms in Africa's manufacturingsector are credit constrained. The fact that few firms obtaincredit is not sufficient to prove constraints, since certainfirms may not have a demand for credit while others may be refusedcredit as part of profit maximising behaviour by banks. To investigatethis question, we use direct evidence on whether firms had ademand of credit and whether their demand was satisfied in theformal credit market, based on panel data on firms in the manufacturingsector from six African countries. Of those firms with a demandfor credit, only a quarter obtained a formal sector loan. Ouranalysis suggests that while banks allocate credit on the basisof expected profits, micro or small firms are much less likelyto get a loan than large firms. We also find that outstandingdebt is positively related with obtaining further lending. Therole of outstanding debt is likely to be a reflection of inefficiencyin credit markets, while the fact that size matters is consistentwith a bias as well, although we cannot totally exclude thatthey reflect transactions costs on the part of banks. We presentan analysis showing how much more profitable small firms mustbe to obtain a loan than large firms.     

CEOs who have COOs: contingency analysis of an unexplored structural form

We use contingency theory to examine, for the first time, the incidence and effectiveness of CEO/COO duos. We argue that industry dynamism, extraordinary organizational task demands, and the CEO's own professional limitations will influence the decision to have a COO, as well as its effect on performance. Based on a large 10‐year sample, we find some support for the contingency view in explaining the presence of COOs; we particularly find that CEOs who lack experience in operational activities and in managing the focal firm are relatively likely to have COOs. We find, however, essentially no support for the contingency view in explaining when COOs are most beneficial. Instead, we find strong evidence of a very substantial negative main effect: CEOs who have COOs deliver lower organizational performance than those who do not. Copyright © 2004 John Wiley & Sons, Ltd.     

The Voluntary (Private) Production of Public Goods,the Gains From Trade,and Comparative Advantage*

Any (finite) number of privately produced public goods are incorporated into a general trade-theory model of private goods and factors. Postulating Cournot-Nash behavior, a necessary condition for gainful trade is derived. Potential trade gains are related to the law of comparative advantage in private goods and the change in the underproduction of public goods. A sufficient condition is also proven. Trade gains/losses are compared for more or less populous economies. All the results have analogues in the literature on imperfect competition and/or increasing returns to scale.     

An economic analysis of cooperative research

The U.S. government's most recent policy initiative to increase industrial research activity is the National Cooperative Research Act of 1984. Since its passage much attention has been given to this new organizational research form, but to date there has not been any systematic investigation of the participants in cooperative research. This paper is an initial attempt to fill that void. First, a classification scheme is presented to describe the research activity of firms currently engaged in cooperative endeavors, as evidenced by mandated filings reported in the Federal Register. Then, a model of inter-firm differences in cooperative research activity is posited and tested using survey-based data for a sample of R&D active firms in the U.S. manufacturing sector. We conclude that market power is the principal determinant of involvement in cooperative research.