Cross-Sectional Evolution of the U.S. City Size Distribution

We report nonparametrically estimated stochastic transition kernels for the evolution of the distribution of U.S. metropolitan area populations, for the period 1900 to 1990. These suggest a fair amount of uniformity in the patterns of mobility during the study period. The distribution of city size is predominantly characterised by persistence. Additional kernel estimates do not reveal any stark differences in intra-region mobility patterns. We characterise the nature of intra-size distribution dynamics by means of measures that do not require discretisation of the city size distribution. We employ these measures to study the degree of mobility within the U.S. city size distribution and, separately, within regional and urban subsystems. We find that different regions show different degrees of intra-distribution mobility. Second-tier cities show more mobility than top-tier cities.     

MEASURING THE COST OF CAPITAL IN AN INTERNATIONAL CAPM FRAMEWORK

This paper can be viewed as extending the traditional CAPM framework in two important ways. The first expands the concept of the market portfolio to include international securities. The second extends the definition of systematic risk to include currency risk.
What becomes clear in estimating the cost of capital for an international asset is that both extensions have become necessary if the traditional CAPM is to remain relevant. International markets have become increasingly integrated over the past two decades and so all assets might now be considered "international" and priced accordingly. The inclusion of the currency risk factor is not an ad hoc addition to the CAPM but rather results quite naturally from the fact that foreign returns need to be converted into a domestic currency.
Based on an examination of 18 companies, the article shows that the use of a broader market portfolio will tend to lower the estimated cost of capital for most firms, but in some cases could actually raise it. (In the case of Singapore Airlines, for example, the currency risk factor adds substantially to the cost of capital, while materially reducing it in the case of Nestlé.) Using a simple regression, the authors also attempt to show how the specifics of a particular company—for example, the currencies that are part of their cost/ revenue structure—determine the impact of currency risk on the cost of capital.     

Web-Based Resources for the Macroeconomist

Information is provided about sources of macroeconomic and financial time series, archives of working papers and econometric software. Other resources, such as sites dedicated to fields of the discipline, and on-line journals are also highlighted.     

An Empirical Investigation of the Effect of CFO Power on Disclosure Quality

We examine the association between chief financial officer (CFO) power and disclosure quality, measured using financial statement disaggregation disclosure and analyst forecast disclosure. Empirically, we validate that CFO power, measured by multiple dimensions, is positively associated with firms’ disclosure quality. We also find that this positive association between CFO power and disclosure quality is stronger when firms exhibit higher governance monitoring and accounting quality. Further analysis shows that our main results hold across multiple disclosure quality tests. Our findings are robust to addressing endogeneity issues using two-stage least squares, Heckman selection bias, and propensity score matching analyses. The results highlight the importance of CFO power for the accounting reporting process and decision-making.     

The evolution of corporate no net loss and net positive impact biodiversity commitments: Understanding appetite and addressing challenges

The World Economic Forum has identified biodiversity loss as an increasingly significant and impactful risk facing business. However, businesses themselves can negatively impact on biodiversity. Recognizing this, a number of companies have developed their own biodiversity commitments, including those to achieve a no net loss (NNL) or net positive impact (NPI) on biodiversity by balancing or outweighing any negative impacts through mitigation activities. We reviewed corporate‐level NNL and NPI commitments over the last two decades to establish the extent of their adoption, retraction, and scientific foundation. Between 2001 and 2016, 66 companies had made NNL/NPI environmental commitments. Thirty three of these 66 companies made specific biodiversity commitments. The numbers of companies making commitments increased in that period. However, some commitments were retracted, or their status became unclear, leaving only 18 companies with active NNL/NPI biodiversity commitments in 2016. Added to this, many of the commitments are lacking science‐based criteria that would allow more transparent and systematic assessment of corporate activities. Thus, although commitments are being made, they may not be delivering as intended. To secure real biodiversity gains, we recommend advancing methods to assess biodiversity risks to businesses, and using science‐based criteria to deepen corporate commitments and actions. Concerted effort from all sectors is needed to halt and reverse biodiversity loss, and the “biodiversity policy super‐year” of 2020 is the perfect moment for business to deliver through well‐framed and implemented commitments to biodiversity NPI.