Are trading bans effective? Exchange regulation and corporate insider transactions around earnings announcements

There is considerable controversy on the role of corporate insider trading in the financial markets. However, there appears to be a consensus view that some form of regulation concerning their activities should be imposed. One such constraint involves a trading ban in periods when corporate insiders are expected to be advantaged vis-à-vis the information flow. This paper directly tests whether constraints of this kind are effective in curtailing insider activity through a study of the trading characteristics of UK company directors. The London Stock Exchange Model Code (1977) imposes a two-month close period prior to company earnings announcements. We find that although the close period affects the timing of director trades, it is unable to affect their performance or distribution. Directors consistently earn abnormal returns irrespective of the period in which they trade. They tend to buy after abnormally bad earnings news and sell after abnormally good earnings news. Moreover, there are systematic differences in the trading patterns of directors surrounding interim and final earnings announcements. It appears that many corporate insiders have private information and exploit this in their trading activities. As a result, one can conclude that trading bans do not impose significant opportunity costs on the trading of corporate insiders.     

A SYSTEMS APPROACH TO THE DEMAND FOR ALCOHOL AND TOBACCO

This paper adopts a systems approach to estimate budget share equations for four categories of alcoholic drinks and for tobacco, using quarterly expenditure data for the period 1964 to 1983. The emphasis is on the importance of the tolerance effects of addiction and on the smoker's participation decision in correctly specifying the model of demand. The model makes explicit recognition of a separate participation decision and the estimates suggest that there is something to be gained by introducing variables to indicate changes in the distribution of income and the demographic structure of the population.     

When worlds collide: The implications of panel data-based choice models for consumer behavior

Panel data, both diary and scanner, have been analyzed by marketing scientists for over thirty years. One of the important uses of panel data is to better understand consumer behavior by developing and testing hypotheses using the revealed preference data rather than experimental data that uses only self-reported behavior or behavior in a simulated choice environment. The purpose of this paper is to suggest areas of research where panel data can be used to better understand the underlying behavior of the panel members.     

Cohabitation or forced marriage? A study of the costs of failing to coordinate fiscal and monetary policies

Conclusions The costs of uncoordinated fiscal and monetary policies involve more than just efficiency losses. Of course there will be the usual efficiency losses associated with noncooperative decision making and they have appeared here. But these are not the main costs. A lack of cooperation between the government and the central bank also imposes a policy conflict which would not otherwise exist. A lack of co-operation provides one player (the central bank) with the opportunity to block the policy options of the other (the government). Hence noncooperation can cost the government its freedom to choose its preferred policy option. These two costs, additional policy conflicts and the loss of policy choice, may be more important than the efficiency losses which are traditionally cited as the reason for cooperating. In any case, they will have important implications both for domestic policy design and for international policy making since central banks evidently find it easier to cooperate among themselves than they do with their own (national) fiscal authorities. Thus, an independent central bank may be necessary to guarantee financial discipline, but it will not be much help if it and the fiscal authorities then fail to coordinate their activities.

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Zusammenfassung “Kohabitation” oder Zwangsheirat? Eine Untersuchung der Kosten einer unterlassenen Koordination von Fiskal- und Geldpolitik. — In vielen L?ndern existieren zwei Entscheidungstr?ger, die jeder für sich die Fiskal- und Geldpolitik betreiben, n?mlich die Regierung und die Zentralbank. Sind die Entscheidungen dezentralisiert, dann kann dies den optimalen Tradeoff zwischen Inflation und Wachstum ver?ndern. In diesem Aufsatz wird im Rahmen der dynamischen Spieltheorie in einem ?konometrischen Modell der italienischen Wirtschaft der effiziente Tradeoff zwischen Inflation und Wachstum gesch?tzt, um zu untersuchen, wie sich die politischen Spielr?ume unterscheiden, wenn die Entscheidungen entweder kooperativ oder nicht kooperativ getroffen werden. Es zeigt sich, da? die Ergebnisse im Fall von Kooperation besser sind als ohne Kooperation. Darüber hinaus wird, wenn es keine Kooperation gibt, die Spanne der Wahlm?glichkeiten verringert, die den Politikern zur Verfügung steht. Demnach sprechen nicht nur Effizienzgewinne, sondern auch andere Gründe dafür, die Fiskal- und Geldpolitik zu koordinieren.

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Résumé Cohabitation ou marriage forcé? Une étude sur les co?ts de l’absence d’une coordination des politiques fiscales et monétaires. — Dans beaucoup de pays ce sont deux institutions qui prennent les décisions et qui coexistent et règlent la politique fiscale et monétaire séparément. Le fait que les décisions sont prises d’une manière décentralisée peut changer l’arbitrage le plus favorable de l’inflation-output. Dans l’article on utilise la théorie dynamique des jeux pour calculer l’arbitrage efficace d’inflation-output dans un modèle économétrique de l’économie italienne pour examiner les différences entre les courbes des possibilités politiques qui résultent des décisions coopératives et non-coopératives. Les résultats montrent que les conséquences obtenues au cas de non-coopération sont inférieures à celles d’une coopération et imposent un conflit politique qui n’existe pas d’autrement. En outre, au cas de non-coopération le nombre d’actions politiques possibles est réduit. Par conséquent, il y a plus de raisons que seulement l’augmentation de l’efficacité pour le désir de coordonner les politiques fiscales et monétaires.

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Resumen Cohabitación o casamíento forzoso? Un estudio de los costos de la falta de coordinatión de la política fiscal y monetaria. — En muchos paises dos instituciones ejecutivas, el gobierno y el banco central, coexisten y manejan la política fiscal y la monetaria separadamente. La toma de decisiones de manera decentralizada puede conducir a un cambio en la relación óptima entre inflatión y producto. En este trabajo se utilizan juegos diferenciales para calcular la relación eficiente entre inflación y producto dentro del marco de un modelo econométrico de tiempo continuo de la economía italiana, con el fin de examinar las diferencias en las fronteras de posibilidad de políticas derivadas de decisiones cooperativas y no cooperativas. Se demuestra que los resultados obtenidos en el caso de no cooperation son inferiores a los del caso cooperativo, y que además imponen un conflicto de política no existente en otros casos. Además, la gama de politicas a election de los que deaden es reducida bajo no cooperacion. Por ello, hay más razones para desear una coordination de politicas fiscales y monetarias que la que representan los beneficios derivados de la eficiencia.

     

Negotiation in engineering design

Concurrent design may shorten the duration of a design project, reduce cost, and improve quality of the final design. However, due to the diversified problem-solving knowledge and different goal setting between design agents, it may increase the number of conflicts and make the project more difficult to manage. In this article, a goal-directed negotiation model for resolving conflicts in a cooperative design environment is presented. The proposed model generates negotiation sets, analyzes utilities derived for each design agent, and evaluates them based on three decision rules: maximization of the joint utility, minimization of individual utility differences, and minimization of individual utility differences and maximization of joint utility. A compromise solution is reached iteratively. The approach proposed in this articles is concerned not just with satisfying design constraints, but attempts to maximize system objectives. An example of the poppet relief valve is used to demonstrate the negotiation concept.