Transparency of Retail Energy Pricing: Evidence from the US Natural Gas Industry

We test and cannot reject the hypothesis that retail pricing of natural gas is transparent for commercial and residential customers served by regulated local distribution companies in the United States. The periods of adjustment to a wholesale price change are 1.54 months for the commercial price and 1.69 months for the residential price. These findings support the view that regulated local distribution companies quickly adjust retail prices to fully capture any change in the wholesale natural gas price. Copyright © 2013 John Wiley & Sons, Ltd.     

Session I: Corporate Purpose and Governance

In this first of five sessions of a recent Columbia Law School symposium devoted to discussion of his new book, Prosperity—and The Purpose of the Corporation, Oxford University's Colin Mayer begins by calling for a “radical reinterpretation” of the corporate mission. For all but the last 50 or so of its 2,000‐year history, the corporation has combined commercial activities with a public purpose. But since Milton Friedman's famous pronouncement in 1970 that the social goal of the corporation is to maximize its own profits, the gap between the social and private interests served by corporations appears to have grown ever wider, helping fuel the global outbreaks of populist protest and indictments of capitalism that fill today's media. In Mayer's reinterpretation, the boards of all companies will produce and publish statements of corporate purpose that envision some greater social good than maximizing shareholder value. To that end, he urges companies to make continuous investments of their financial capital and other resources in developing other forms of corporate capital—human, social, and natural—and to account for such investments in the same way they now account for their investments in physical capital. Although the author appears to prefer that such changes be mandatory, enacted through new legislation and enforced by regulators and the courts, his main efforts are directed at persuading the largest institutional owners of corporations—many of whom are already favorably predisposed to ESG—to support these corporate initiatives. Marty Lipton, after expressing enthusiasm about Mayer's proposals, suggests that mandating such changes is likely neither feasible nor desirable, but that attempts—like his own New Paradigm—to gain the acceptance and support of large shareholders is the most promising strategy. Ron Gilson, on the other hand, after voicing Lipton's skepticism about the enforceability of such statements of purpose, issues a number of warnings. One is about the political risks associated with ever more concentrated ownership of public companies in a world where populist distrust of all concentrations of wealth and power is clearly on the rise. But most troubling for the company themselves is the confusion such proposals could create for corporate boards whose responsibility is to limit two temptations facing corporate managements: short‐termism, or underinvestment in the corporate future to boost near‐term earnings (and presumably stock prices); and what Gilson calls hyperopia, or overinvestment designed to preserve growth (and management's jobs) at all costs.     

Federal deposit insurance coverage and bank failures: A cointegration analysis with semi-annual data, 1965–91

This study examines empirically the link between bank failures and statutorially created increases in the extent of federal deposit insurance coverage. The model includes such factors as the percentage of deposits at federally insured banks that was covered by federal deposit insurance (FDICOV), the tangible capital/asset ratio, the commercial bank cost of funds, and the prime rate of interest. Using cointegration techniques involving maximum eigenvalue, trace, and likelihood ratio tests, together with semi-annual data for 1965–91, the study reveals that the bank failure rate is cointegrated with FDICOV, the capital/asset ratio, and the commercial bank cost of funds. Accordingly, it is inferred that—consistent with previous studies—the system of federal deposit insurance very likely induced bank failures during the study period.     

Discussion of “An Empirical Examination of Tax Factors and Mutual Funds' Stock Sales Decisions”

Review of Accounting Studies -     

Fetal protection: Law,ethics and corporate policy

Corporate fetal protection policies are designed to protect unborn children from exposure to harmful substances in the workplace. In recent years, a number of corporations have instituted fetal protection policies which excluded all fertile female employees from jobs which exposed them to hazardous substances. Critics argued that these policies discriminated against women, and several lawsuits were filed.The United States Supreme Court recently decided a case involving the fetal protection policy of Johnson Controls, Inc. This article will analyze the impact of the Supreme Court decision from a legal and ethical perspective. Practical guidelines for policies which protect the unborn and comply with the law will also be addressed.Ira Sprotzer, J. D., is an Associate Professor and Chairman of the Department of Business Policy and Environment at Rider College, Lawrenceville, N.J. Professor Sprotzer is a member of the New Jersey Bar and publishes research in the field of Employment Law.Ilene V. Goldberg, J. D., is an Assistant Professor in the Department of Business Policy and Environment at Rider College, Lawrenceville, N.J. Professor Goldberg is a member of the New Jersey and Pennsylvania Bars and publishes research on topics related to Health Law.     

Macroeconomic Determinants of Multifamily Housing Starts: A Descriptive Analysis

The multifamily component of residential construction has received relatively little attention in the existing literature on macro-economic housing markets. In those studies where single and multifamily starts have been treated separately [ Kawaller (1976) , Arcelus and Meltzer (1973) , Brady (1973) , Kalchbrenner (1972) Smith (1969) , the greater share of attention and background discussion has been directed toward the singlefamily sector. Such treatment probably is due to the fact that multifamily starts have traditionally accounted for the smaller fraction of total private starts. Since the Census Bureau began recording the starts breakdown in 1959, however, this fraction has not fallen much below a fifth in any quarter, and it has been as high as 48 percent. Moreover, with a growing acceptance of the condominium and cooperative housing concepts, expanding Federal rental assistance initiatives, and changing life style preferences, it would appear that increased attention given to the multifamily sector, may significantly enhance our understanding of housing markets in general.