Management practices in Australasian ethical investment products: a role for regulation?

This paper adds to the literatures on socially responsible investment (SRI), investment management, regulation of financial services and social accounting by providing a comprehensive survey of investment methods used in SRI products and regulated social reporting in financial services. Australian and New Zealand regulations require issuers of self‐declarative SRI products to provide details on methods used in portfolio construction. Regulators' objectives to standardize the reporting of portfolio construction and thus improve its comparability were identified by examination of parliamentary debates and other public reports. Portfolio construction styles of 86 SRI products managed by 63 financial institutions in Australia and New Zealand were chosen for analysis. Statistical analysis was conducted to identify associations between styles, construction methods and assessment techniques over a four‐year period: 2004–2007. These aspects were further examined in 18 case studies. Over the period, diversity and intensity of construction methods had increased both within and between investment managers. The non‐standard nature of management consultation used in SRI products, marketing needs to distinguish rather than standardize investment methods and the types of information thought relevant to clients did not reconcile easily with the types of information required by regulation. The more recent products in the sample tended to reference market indexes in portfolio construction, separate social considerations from financial considerations and delegate qualitative assessments of invested companies. Consumer policy implications arise from questions bearing on the integrity of information attached to investment products and the effective monitoring of delegated investment processes. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Econometric Causality

This paper presents the econometric approach to causal modelling. It is motivated by policy problems. New causal parameters are defined and identified to address specific policy problems. Economists embrace a scientific approach to causality and model the preferences and choices of agents to infer subjective (agent) evaluations as well as objective outcomes. Anticipated and realized subjective and objective outcomes are distinguished. Models for simultaneous causality are developed. The paper contrasts the Neyman–Rubin model of causality with the econometric approach.     

Exploring the effectiveness of cigarette warning labels: findings from the United States and United Kingdom arms of the International Tobacco Control (ITC) Four Country Survey

• This paper explores the effectiveness of cigarette warning labels across two countries, one (the UK) with new and stricter legislation where text based labels have been made more prominent and one (the USA) with less stringent regulation, where labels are less visible. Using longitudinal data from the two countries, the research seeks to investigate the impact of the different types of warning labels on the information processing by consumers. This paper assesses the effectiveness of warning labels in terms of: consumer attention, elaboration, contemplation on quitting and behavioural compliance. This study provides a comprehensive examination of these key factors in a fixed causal sequence. Structural equation modelling was used to test this model based on longitudinal panel survey data from the International Tobacco Control (ITC) Four Country Survey. Analysis of a sample of 901 US smokers and 1459 UK smokers yielded results in full support of all hypothesised relationships in the model proposed for both countries. Findings suggest that the new European Union policy of more prominent warning labels has a direct effect on influencing behavioural compliance by smokers.

Copyright © 2007 John Wiley & Sons, Ltd.     

Donor advised funds: Ethical issues on the new frontier of philanthropy

This paper analyzes critical ethical and legal issues related to the administration and use of Donor Advised Funds for charitable fundraising in American philanthropy. With the swift and profound reshaping of the philanthropic landscape caused by Donor Advised Funds, the mainstream charitable world continues to both digest how these changes affect their work and address the myriad of legal, ethical and donor/public relations issues that arise in connection with gifts to and distributions from them. This paper discusses the most relevant legal and ethical principles governing the sponsorship of, receipt from and contribution to Donor Advised Funds, sets forth the significant legal and ethical issues faced by each of these parties, and finally, puts forth recommendation for them to follow.     

Ordering the extraction of renewable resources: The case of multiple aquifers

Optimal sequencing of resource extraction is typically studied for nonrenewable resources. We provide conditions for optimal use of multiple sources of a renewable resource and characterize the resulting extraction sequence, resource scarcity values, and (single) efficiency price path for two groundwater aquifers and an abundant alternative resource. Even with one demand, the optimal sequence depends on the differential opportunity costs of the two renewables. A numerical simulation for the South O‘ahu aquifer system, which also allows for different distribution costs, illustrates the case of using the “leakier” aquifer first and then switching to simultaneous use of both resources. The welfare gain from specialization relative to independent management is $4.7 billion.     

The long-run relationship between private and public savings: An empirical note

This empirical note extends the recent work by Holmes (2006) in examining the long-run relationship between private and public savings in the U.S. over the post-World War II period. Standard Engle-Granger cointegration tests fail to reject the null hypothesis of no cointegration; however, once allowance is made for an endogenous break in the cointegrating relationship, the weak form of the Ricardian equivalence proposition is supported.     

The value of tax benefits and the cost of liquidating versus selling failed thrift institutions

This paper examines the 205 insolvent thrifts that were resolved in 1988 and assesses the cost savings obtained by selling 179 of the institutions through assisted acquisitions rather than liquidating them. It is hypothesized that the cost savings were determined by factors related both to the future viability of the acquired institution and the particulars of the deal arranged by the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. The added value by selling a thrift is determined primarily by the level of core deposits obtained by the acquired thrift. However, the branch structure and purchased mortgage-servicing rights should also add franchise value to the firm. In addition to these factors, the analysis accounts for the tax benefits and other regulator forbearances associated with the deals. Other characteristics of the deals are also considered. It is found that core deposits, tax benefits, purchased mortgage-servicing rights, average branch size, and type of acquirer, as well as some other factors, were significant determinants of the cost savings obtained through selling an institution rather than liquidating it.     

Environmental proactivism and firm performance: evidence from security analyst earnings forecasts

There is an ongoing debate over the impact of corporate pro-environment actions and strategies (reflected, for example, in pollution prevention and emission reductions, product re-design, materials stewardship) on corporate financial performance in US corporations today. A review of the existing literature in this area yields no consistent pattern of relationships between corporate environmental proactivism and financial performance when historical corporate accounting performance and stock market measures of performance are used. We revisit this relationship using a novel measure of firm performance: security analyst earnings forecasts. Specifically, we demonstrate a significant, negative relationship between environmental proactivism (using Toxic Release Inventory data) and industry analyst 1- and 5-year earnings-per-share performance forecasts for a sample of 523 US firms in 1992. We discuss the implications of these findings and provide suggestions for future research. © 1997 John Wiley & Sons, Ltd and ERP Environment.     

金融中介及关系银行——基于广东外资企业银行融资数据的研究

本文根据外资银行和国有商业银行向在中国境内的外资企业提供的外币贷款和人民币贷款的数据 ,对金融中介及关系银行进行了实证研究。我们的主要结论有两点 :第一 ,企业与银行建立起来的金融业务关系越长久 ,那么其所获得的外币贷款利率就越低。这是对金融中介理论的支持。另外 ,外资控股、第三方担保等因素 ,也具有降低外币贷款利率的效应。第二 ,人民币贷款的利率随着外资企业与更多的银行建立和保持合作关系而降低。人民币贷款主要是由我国商业银行提供。如果商业银行间的竞争仅仅是用来作为信贷定价的主要决定因素 ,而不是用来推进金融创新 ,提供高质量的金融产品和服务 ,那么这将会损害我国商业银行的获利能力并进而影响金融系统的健康发展。     

Capital Flows to Asia: The Role of Monetary Policy

Monetary policy played an important role in the Asian experience with capital inflows. Central banks used monetary policy to contain the threat of overheating, but the resulting increases in interest rates attracted additional inflows. Empirical measurement of these links shows that tight monetary policy was an important source of inflows to Indonesia and Thailand in recent years, and that the independence of monetary policy decreased during the inflow period.