A Norwegian fixation: explaining cheap money in Norway, 1945–1986

In a number of European countries, credit markets were characterised by heavy regulations of quantities and prices, in terms of interest rates, in the post war years. In Norway, the regulations became more vigorous and lasted much longer, than most other countries. This article seeks to explain the extent and persistence of the policy by tracing the role of leading economists, of financial sector, and political considerations in relation to growths policies and the housing markets. Whereas a number of factors are highlighted in the emergence of the system, the role of political considerations in relation to cheap funding for the housing sector appears as a fundamental cause and condition in explaining the persistence of the cheap money policies into the mid-1980s.     

Simulating Ruin Probabilities for a Class of Semimartingales by Importance Sampling Methods

We consider the problem of finding the probability of ruin when the risk process is assumed to be a special semimartingale with absolutely continuous characteristics. We show how the generalized Girsanov theorem can be used in connection with Monte Carlo simulation to obtain estimates of the ruin probabilities. It is shown by both analytical and numerical examples that these methods can be significantly better than ordinary simulations provided the new measure is chosen with some care.     

Discrimination in rental markets: Evidence from Norway

This paper examines discrimination in the rental housing market. We analyze a rich data set on rental contracts from Norway. We find that tenants born abroad pay a statistically significant and economically important premium for their dwelling units after controlling for a comprehensive set of apartment, individual and contract specific covariates. Moreover, we find that the premium is largest for tenants of African origin. Finally, Norwegians whose parents were born abroad also face a statistically significant and economically important rental premium that is directly comparable to the premium paid by tenants born abroad.     

An Experimental Analysis of the Effects of Non‐audit Services on Auditor Independence in Appearance in the European Union: Evidence from Germany

The provision of non‐audit services by the statutory auditor may have a negative impact on auditor independence. Therefore, the European Union decided to prevent auditors from offering a significant extent of non‐audit services to audit clients. Prior research has revealed that different advisory services have different effects on perceived auditor independence. This could be caused by differences in number and intensity of independence threats (self‐interest, familiarity, self‐review, advocacy). Therefore, this experimental study investigates the effect of such threats on independence perceptions in the case of German individual investors. Multivariate analyses indicate that a high self‐interest and a high‐familiarity threat may impair auditor independence in appearance. On the other hand, our findings do not reveal a significant effect of an existing advocacy threat on investors’ trust in auditor independence. A negative effect of a self‐review threat is not directly confirmed. However, the provision of services with regard to internal controls, and thus the self‐review threat, interacts with the self‐interest threat. They potentially impact perceived auditor independence negatively when non‐audit fees are high. In contrast, no significant interactions with familiarity are found. Based on these findings, a general prohibition of non‐audit services does not seem to be necessary. On the other hand, a non‐audit fees cap might be reasonable.     

CO2 abatement policy with learning-by-doing in renewable energy

This paper analyzes the implications of CO₂ abatement when there is endogenous technological change in renewable energy. A multi-sector numerical general equilibrium model for Denmark is proposed to reflect two basic assumptions about technological progress in renewable energy. First, there is learning-by-doing and unit costs of production are a decreasing function of cumulated output. Second, technological progress only benefits new vintages of capital. The learning-by-doing process is calibrated to match current projections for technological progress in wind-based electricity. The implications are a marked reduction in the total and marginal cost of abatement and a decline in the optimal level of near-term abatement.     

How costly is the Sarbanes Oxley Act? Evidence on the effects of the Act on corporate profitability

The Sarbanes-Oxley Act (SOX) was intended to protect investors by improving the accuracy and reliability of corporate disclosures. However, critics have argued that the costs of SOX far outweigh its intended benefits. Prior studies based on stock-price reactions to SOX-related events document mixed evidence on the expected impact of SOX. In contrast, we provide evidence on the net realized costs of SOX by examining its impact on operating profitability. We find that average cash flows decline by 1.3% of total assets after SOX. These costs are more significant for smaller firms, for more complex firms, and for firms with lower-growth opportunities. Annually, these costs range from $6 million for smaller firms to $39 million for larger firms. Further, we document that net SOX-related costs are not limited to one-time expenses associated with internal-control design and implementation. In aggregate, for the 1428 firms in our sample, these costs amount to about $19 billion per year. Profitability is lower for up to four years post-SOX. To our knowledge, ours are the first estimates of the realized net costs imposed by SOX.     

Market Power and Market Failure The Decline of the European Fertilizer Industry and the Expansion of Norsk Hydro

During the 1980s, the fertilizer industry in Western Europeunderwent some radical changes. Reduced profitability and overcapacityforced a number of smaller producers to close down, and mostof the major firms in the business either withdrew from themarket or reduced their capacity. The exception was the Norwegianindustrial conglomerate Norsk Hydro, which expanded rapidlyand established itself as the largest producer in Europe andlater globally. The article discusses the strategy behind Hydro's expansionin relation to the changing structure of the fertilizer market,which historically was characterized by tacit and explicit agreementson prices and market shares between the major producers. Hydro'sstrategy and growth are analyzed in relation to some theoreticalcontributions from the study of transnationalisation of enterprises.A main argument is that Hydro's expansion was not driven byadvantages in cost structure or organizational capabilities,nor did the expansion create such advantages. The Norwegiancompany expanded in foreign markets partly because it had lessto lose from a counterattack than competitors in larger marketsand partly because of strategic disadvantages. Contrary to mostof its large European competitors, Hydro failed to identifythe long term threats to the stability and profitability ofthe Western European market.     

Über die versicherten-sterblichkeit in Finnland. 1920–1930

Abstract

Ende des Jahres 1932 trafen die finnischen Lebensversicherungsgesellschaften Massnahmen für eine gemeinsame Untersuchung über die Sterblichkeit ihrer Versicherten während des J ahrzehntes 1920–1930. In dieser Absicht gab en die Aktuare der verschiedenen Gesellschaften den Herren Dr. Emil Wessel, Dr. E. A. Hintikka und Professor Dr. R. Nevanlinna in Auftrag einen Entwurf zur Ausführung einer solchen Untersuchung zu machen. Anfang Dezember war der Vorschlag des Dreier-Komitees fertig, der auch genehmigt wurde, sodass die Arbeit im Anfang des folgenden Jahres beginnen konnte.