EDITORIAL: TAX REFORM AND SIMPLIFICATION

Major tax reform to simplify the UK tax system is possible. Merging income taxes, social security taxes and corporation tax into only a single flat-rate of tax on all incomes would be a radical start. Avoiding taxes on income and expenditure which are 'too high' requires major reductions in government spending, mainly on the welfare state. Given the political will, over a period of years we really can hugely improve the UK tax system.     

Gentlewomanly capitalism? Spinsters,widows, and wealth holding in England and Wales,c. 1800–1860

This article examines the demographic and geographical importance of wealthy middle-class women. It argues that in certain towns and cities, notably London, such women were of sufficient importance to merit attention in their own right. Drawing upon a sample of wills, it describes the types of wealth owned by these women. By examining women's investment in government securities, it argues that women's wealth was of crucial importance to the British state. Its findings challenge conventional understandings of the relationships between gender ideology, wealth holding, and economic development.     

DURATION MOMENTS AND YIELD CURVE MOVEMENTS

In this paper we will analyze the relationship between the value and duration moments of a cash flow and movements in the yield curve. We will show that for changes in the yield curve which can be related to tⁿ , the 1st order changes in the net present value of a cash flow are linearly dependent on the n + lth duration moments, and that the 2nd order changes are dependent on the sum of duration moments of order 2 n + 1 and 2 n + 2. We will use this relationship to tilt tracking portfolios so as to protect them against specific changes in the yield curve.     

Reform of European Merger Policy

The paper highlights the main drivers for merger policy reform in the European Union, including the consequences of the recent appeal court reverses. It discusses some of the substantive and procedural issues that the reform package should address, and outlines the reforms in progress. The author concludes that much of the reform package will be beneficial, but some important opportunities have been missed in this inevitably patchwork process.     

Are the Best Small Companies the Best Investments?

Previous research finds that large companies previously judged to be excellent growth companies have subsequently been poor investments. We examine small companies selected by Business Week on the basis of multiple criteria used in annual articles featuring highly rated growth companies. We study the investment performance over the three years before eleven annual Business Week publications and the three years after publication. We find positive excess returns in the pre‐publication period, but negative excess returns in the post‐publication period. This reversal in investment performance appears to be due to a mean‐reversion tendency in operating performance, in which the earnings and the past rates of return on capital of such companies subsequently decrease significantly.     

Day-of-the-Week Effects in the Long-Run Performance of Initial Public Offerings

This study examines the influence of day-of-the-week patterns in security returns on long-run IPO underperformance. Comparisons are made between the IPOs in Ritter's [20] database, and a constructed set of matching firms based on SIC code and size, using NYSE, AMEX, and NASDAQ securities. It is found that virtually all of the IPO underperformance occurs on Mondays and Tuesdays and that the degree of underperformance significantly differs from other days. Thus, a common explanation may exist for the general day-of-the-week pattern in security returns and IPO long-run underperformance.     

Classification and aggregation: An application to industrial classification in cps data

In this paper we offer a method for deciding how to aggregate a set of elementary industries. The method is then applied to the problem of estimating a wage equation that allows for industry-specific effects. Our method explicitly formalizes the trade-off between goodness-of-fit and parsimony implicit in an aggregation problem. By varying the parameter of the assumed loss function, one obtains a whole sequence of aggregation levels. Further, the resulting sequence is consistent; that is, groupings formed at one level of aggregation will never be undone when one aggregates further.