What jackpot? The optimal lottery tax

The payout rate on lotto is normally fixed. We show that such a policy is generally suboptimal from the lotto authorities' point of view. The payout rate should be allowed to vary according to the number of rollovers that have occurred. To illustrate our argument, we simulate and optimize an econometric model of the lotto market in Israel. We also consider whether it is profitable to increase the frequency of lotto from once to twice a week.     

CONVEXITY,MAGNIFICATION, AND TRANSLATION: THE EFFECT OF MANAGERIAL OPTION‐BASED COMPENSATION ON CORPORATE CASH HOLDINGS

Using the distinctions among the convexity, magnification, and translation effects, we identify the pertinent parameters and examine empirically the relation between cash holdings and option‐based managerial compensation. We show that changes in delta reduce the effects of magnification and convexity on managerial risk aversion. We also provide evidence that there is a negative relation between the option‐based incentives delta and vega and cash holdings. These results are robust when incentives are extended to include all executive board members and when the sample is broken down according to different risk characteristics.     

Political connections and corporate financial decision making

Review of Quantitative Finance and Accounting - This paper investigates whether and how political connections influence managerial financial decisions. Our study reveals that those firms that have...     

IMPORTANCE OF THE FUND MANAGEMENT COMPANY IN THE PERFORMANCE OF SOCIALLY RESPONSIBLE MUTUAL FUNDS

We compare the performance of a sample of U.K.‐based socially responsible investment (SRI) funds with similar conventional funds using a matched‐pair analysis based on size, age, investment universe, and fund management company (FMC). We find that both the SRI and conventional funds outperform the market index about 50% of the time, even after fees. Subsample tests show that the SRI funds in our sample perform better in the pre‐ and postfinancial crisis periods but underperform during the financial crisis period. Importantly, we find that the FMC plays a major role in the outperformance of both SRI and conventional funds.     

Understanding Differences in Self-Reported Expenditures between Household Scanner Data and Diary Survey Data: A Comparison of Homescan and Consumer Expenditure Survey

Household scanner data contain rich information on household demographics and transactions in actual markets over a long time period. To more fully understand the characteristics of these data, we conducted an analysis to determine whether household expenditures in the Nielsen Homescan panel are similar to the Bureau of Labor Statistic's Consumer Expenditure Diary Survey. We found that many differences in reported expenditures across the two datasets can be explained by such household demographics as female head, income, and household size, for example. The largest degrees of discrepancies across datasets occur for food categories containing more random-weight foods without universal product codes.     

Returns to spending on agricultural extension: the case of the National Agricultural Advisory Services (NAADS) program of Uganda†

The aim of this paper is to assess the direct and indirect impacts of the agricultural extension system of Uganda, the National Agricultural Advisory Services (NAADS) program, on household agricultural income. Data from two rounds of surveys of Ugandan rural farm‐households conducted in 2004 and 2007, as well as different program evaluation methods and model specifications, are used to estimate impacts and compute a rate of return. The direct and indirect impact of the program is estimated at 37–95% and 27–55% increase in per capita agricultural gross revenue between 2004 and 2007 for households participating directly and indirectly in the program, respectively, compared to nonparticipants. The rate of return on the program's expenditures is estimated at 8–49%. The program has been relatively more effective among male‐headed, larger, and asset‐poor households, as well as those taking up noncrop high‐value enterprises and living further away from financial services, all‐weather roads, and markets or located in the Eastern and Northern Regions. Policy implications of the results are drawn.     

Competitive intelligence and strategic group decisions: A new diagnostic tool

The use of competitive intelligence (information on competitors, technology, market developments, etc.) in strategic group decision making is of great interest to practitioners and strategy researchers alike, yet relatively little is known about the availability of competitive intelligence and the actual need for intelligence by decision makers. This article develops a decision-dependent input/participants matrix which is the basis for the derivation of seven intelligence availability and demand indices. The indices are diagnostic tools to help companies design and monitor strategic competitive intelligence gathering and distribution. They constitute part of an organizational intelligence support system designed to strengthen group decisions such as launching a new product. Practitioners can use the indices to diagnose problems countered by groups of decision makers in the intelligence gathering and distribution activities of organizations, and researchers can use them in the systematic study of this new field. An application of the tool to a pharmaceutical company is described.     

Structural Adjustment Programmes and Technical Efficiency in the Malawian Manufacturing Sector

This paper examines the efficiency of firms within the structural adjustment period in four sub‐sectors in Malawian manufacturing industry: food processing, tea processing, clothing and footwear, and pharmaceuticals and soaps. We first estimate stochastic production frontiers for each sub‐sector and predict firm level efficiencies using panel data between 1984 and 1988. Secondly, we attempt to associate predicted firm level efficiencies with firm‐specific and industry characteristics using a censored Tobit regression analysis. Results reveal that the average annual technical efficiency ranges from 53 per cent in the pharmaceuticals and soaps sub‐sector in 1984 to 83 per cent in the clothing and footwear sub‐sector in 1984. Technical efficiencies decline over time in the food processing, tea processing, and clothing and footwear sub‐sectors while those in the pharmaceuticals and soaps sub‐sector increase over time. We also find that technical efficiency significantly declines with firm size, domestic monopoly power and tariffs, while it is a positive function of factor intensity and skills of workers. Cet article examine l’efficience des entreprises en période d’ajustement structurel dans quatre sous‐secteurs de l’industrie manufacturière au Malawi: agroalimentaire, transformation du thé, vêtements et chaussures, produits pharmaceutiques et savons. Nous estimons d’abord pour chaque sous‐secteur des frontières stochastiques des possibilités de production et nous prédisons le niveau d’efficience des entreprises sur la base des données recueillies au moyen d’un panel entre 1984 et 1988. En second lieu, nous tentons d’associer le niveau d’efficience prédit à des caractéristiques propres à l’entreprise ou au métier en utilisant une analyse de régression censurée. Les résultats montrent que l’efficience technique varie en moyenne de 53% dans le sous‐secteur des produits pharmaceutiques et savons en 1984 à 83% dans le sous‐secteur des vêtements et chaussures en 1984. L’efficience technique diminue avec le temps dans les sous‐secteurs de l’agroalimentaire, de la transformation du thé ainsi que des vêtements et chaussures, tandis qu’elle s’améliore dans celui des produits pharmaceutiques et savons. On constate également que l’efficience technique baisse sensiblement avec l’accroissement de la taille de l’entreprise, l’acquisition d’une position de monopole et la protection tarifaire, tandis qu’elle augmente avec l’intensité des facteurs et la qualification de la main‐d’oeuvre.     

DETERMINANTS OF CHILD NUTRITION IN MALAWI

This paper investigates factors that determine child malnutrition in Malawi. Measuring child nutrition using anthropometric measures, the study finds that child malnutrition worsens with age until a certain critical age beyond which it starts to improve and that boys are more at risk than girls. We also find evidence that child malnutrition is more prevalent in children that fall sick regularly and in households that draw water from a well, protected or not. In addition, children who come from households that have mother/female household heads who are economically empowered, in terms of being in salaried employment or working in a family business, tend to be better nourished.