Debtor-in-possession financing

Several recent papers have documented the benefits of debtor-in-possession (DIP) financing in the restructuring of firms in Chapter 11. However, the view on benefits is not unanimous and some legal scholars have raised doubts about DIP financing's effects on debt-holders and the possibility of expropriative wealth transfers. In this paper we address this issue by analyzing both stock and bond price data for a comprehensive sample of DIP loans and find significant positive abnormal stock and bond returns at the announcement of DIP loans. Also, we do not find evidence of wealth transfers from junior to senior debt-holders. Further, we examine the DIP loan process in detail and we document important institutional features of DIP loans such as maturity, covenants, fees and interest charges. We find evidence of intense monitoring using covenants. We also find higher fees and charges associated with DIP loans. We argue that overall the results are consistent with the information processing role of financial intermediaries.     

Current state of the electrification of Russia

The current progress of electrification in Russia is clearly insufficient compared with G8 countries. At the same time, economy sectors have a high potential for energy saving. The electricity consumption of households depends on their cash income and the growth rate of electricity tariffs.     

Stochastic frontier models with random coefficients

The paper proposes a stochastic frontier model with random coefficients to separate technical inefficiency from technological differences across firms, and free the frontier model from the restrictive assumption that all firms must share exactly the same technological possibilities. Inference procedures for the new model are developed based on Bayesian techniques, and computations are performed using Gibbs sampling with data augmentation to allow finite‐sample inference for underlying parameters and latent efficiencies. An empirical example illustrates the procedure. Copyright © 2002 John Wiley & Sons, Ltd.     

Socio‐economic distance and spatial patterns in unemployment

This paper examines the spatial patterns of unemployment in Chicago between 1980 and 1990. We study unemployment clustering with respect to different social and economic distance metrics that reflect the structure of agents' social networks. Specifically, we use physical distance, travel time, and differences in ethnic and occupational distribution between locations. Our goal is to determine whether our estimates of spatial dependence are consistent with models in which agents' employment status is affected by information exchanged locally within their social networks. We present non‐parametric estimates of correlation across Census tracts as a function of each distance metric as well as pairs of metrics, both for unemployment rate itself and after conditioning on a set of tract characteristics. Our results indicate that there is a strong positive and statistically significant degree of spatial dependence in the distribution of raw unemployment rates, for all our metrics. However, once we condition on a set of covariates, most of the spatial autocorrelation is eliminated, with the exception of physical and occupational distance. Racial and ethnic composition variables are the single most important factor in explaining the observed correlation patterns. Copyright © 2002 John Wiley & Sons, Ltd.     

Doing qualitative field research in management accounting: Positioning data to contribute to theory

In this paper we argue that theory, method, methodology, and knowledge gains in qualitative field studies are intertwined through the ongoing hypothesis development in the field. We develop our argument through a discussion of specific qualitative field studies in management accounting. We emphasise in particular the distinctive role of theory in qualitative research as relating to expression of a subjective reality more than clarification of an objective one. In considering this subjectivity we discuss the ways in which the doing of qualitative research brings to bear discipline on the researcher allowing us to assess the trustworthiness of their accounts. The intention is to develop a more appropriate basis for judging the plausibility of qualitative field studies than notions borrowed from positivistic methodology.     

Accounting Policies in Agencies with Moral Hazard and Renegotiation

We emphasize the role of accounting policies, and their audit, in an earnings management setting. We use a two–period agency in which three frictions interact: the agent privately observes action (or effort) supply and output, and the initial contract is subject to renegotiation. This creates a setting in which both players' behavior is of concern, and, importantly, information rationing is efficient. Moreover, this information rationing is directly interpretable as being produced by an accounting policy whose application is ensured by an auditor.     

The appraisal of ordinary shares by Saudi investors

This paper reports on a questionnaire survey about share valuation practices among investors and their intermediaries in Saudi Arabia. The findings suggest that fundamental analysis is used most by investor respondents where a P/E multiple is applied to an earnings forecast to generate a prediction of future price. However, technical analysis is also used to a much greater extent than in developed markets. Finally, the results indicate that quarterly and annual reports as well as newspapers are widely consulted by investors when forming their expectations about share valuations.     

Learning and the monetary policy strategy of the European Central Bank

This paper examines the welfare implications of alternative inflation targeting proposals for the monetary policy of the European Central Bank. We assume that policy makers have to “learn” the laws of motion of inflation in an economy characterized by “stickiness” in domestic price setting behavior and subjected to recurring shocks to productivity, exports and foreign price. We find that a switch from an “asymmetric” inflation targeting strategy to an “symmetric” makes little difference in welfare payoffs, but it comes at a cost of much higher interest-rate variability. We also find that there are practically no welfare gains from switching from an inflation-targeting strategy based on the Harmonized Index of Consumer Prices (HICP) to a strategy based on the domestic price component of the HICP.