A note on estimating the divisional cost of capital for diversified companies: an empirical evaluation of heuristic-based approaches

This note provides an empirical analysis of the potential for heuristic-based approaches to derive a divisional cost of equity from a firm's total cost of capital. Since an empirical relationship between fundamental information and systematic risk has previously been shown in other studies, idiosyncratic information on risk and performance ought to serve as a good proxy to calculate divisional adjustments. Two practically used, heuristic-based approaches are tested and a significant relationship is found between one of the measures and CAPM beta. This method may offer a plausible and comparatively uncomplicated method for adjusting a firm's total cost of capital for divisional use.     

The rise and fall of a market leader: Frozen foods in the U.K.

This paper explores the nature of competitive assets that are based on control of part of a market's infrastructure using a case study of the U.K. frozen food market. Following an argument due to Stigler, the thesis of the paper is that such assets are inherently transitory, and that positions of market leadership based on them tend to erode. This argument is consistent with the experiences of Birds Eye during the post-War period.     

Bürgerversicherung — Die Wirkung von Kopfprämien auf den Arbeitsmarkt

Capitation fees are considered to be an option for a change in funding principles for statutory health care insurance. This paper discusses several models of capitation fees either to be introduced for a part of the population or for all citizens. It analyses the impact of a change in financing health care on the labour market. Therefore microeconomic theory and a QUERU-model is applied. It also considers the issue of presently co-insured dependents.     

Kommunikationsproblem interaktives Fernsehen?

While other European countries — above all Great Britain — experienced large-scale changes of the television landscape due to the introduction of interactive services, interactive television seems to remain of marginal importance in Germany. Although interactive television has to face specific supply-side problems in Germany, there is an obvious lack of studies that offer information on the knowledge about, attitudes towards and usage of interactive television services. The results of a regional survey and a content analysis of regionally important newspapers show that interactive services are relatively well-known, raise indifferent attitudes and are rarely used. Moreover the results indicate that interactive television faces a communication problem. Theoretically, the mass media should play a decisive role in the process of the adoption of innovations. In contrast the data shows that information from mass media channels has an almost negligable effect on the knowledge about, attitudes towards and the usage of interactive television services.     

School competition and students’ entrepreneurial intentions: international evidence using historical Catholic roots of private schooling

School choice research mostly focuses on academic outcomes. Policymakers increasingly view entrepreneurial traits as a non-cognitive outcome important for economic growth. We use international PISA-2006 student-level data to estimate the effect of private-school competition on students’ entrepreneurial intentions, measured by their occupational desire to manage a small enterprise. We exploit Catholic-Church resistance to state schooling in the 19th century as a natural experiment to obtain exogenous variation in current private-school shares. Our instrumental-variable results suggest that a 10%-point higher private-school share raises students’ entrepreneurial intentions by 0.3–0.5% points (11–18% of the international mean) even after controlling for current Catholic shares, students’ academic skills, and parents’ entrepreneurial occupation.     

Do Inventories Matter in Dealership Markets? Evidence from the London Stock Exchange

Using London Stock Exchange data, we test the central implication of the canonical model of Ho and Stoll (1983) that relative inventory differences determine dealer behavior. We find that relative inventories explain which dealers obtain large trades and show that movements between best ask, best bid, and straddle are highly correlated with both standardized and relative inventory changes. We show that the mean reversion in inventories is highly nonlinear and increasing in inventory levels. We show that a key determinant of variations in interdealer trading is inventories and that interdealer trading plays an important role in managing large inventory positions.