Public service and private gain

The Department of Education &; Science recently published details of the type of financial delegation schemes which schools will have to submit by September 1989. Together with other elements in the Education Reform Act, it is clear that delegation will give considerable scope to headteachers with the requisite abilities and attitudes to develop as general managers, and so create distinctive institutions which reflect their vision of what constitutes a good school.     

Wealth effects of convertible-bond and warrant-bond offerings: a meta-analysis

The literature on wealth effects associated with the announcements of convertible-bond and warrant-bond offerings is reviewed. The findings of 35 event studies, which include 84 sub-samples and 6310 announcements, are analysed using meta-analysis. We find a mean cumulative abnormal return of?1.14% for convertibles compared with?0.02% for warrant bonds, the significant difference confirming a relative advantage for warrant bonds. Abnormal returns for hybrid securities issued in the USA are significantly more negative than those issued in other countries. In addition, issuing hybrid securities to refund debt does not seem to be favoured by investors. Finally, several factors identified as important by theory or in prior research are not significant within our cross-study models, suggesting that more evidence is needed to confirm whether they are robust.     

Strategic Sequential Bidding for Government Land Auction Sales – Evidence from Singapore

This paper studies the extent to which equilibrium land auction prices are pushed up sequentially due to strategic bidding behaviors in government land auction sales. Using a unique dataset that covers the universe of tendering prices submitted by all developers for all residential land auction sales in Singapore, we find that a tenderer’s bids are significantly higher where there was a previous land parcel sold within two years and located within four kilometers. The identified price margin decreases with time and geographic distance. Tracking sequential bids submitted by the same developer over time, we find that the incumbent winner of a previous auction is more likely to participate in subsequent nearby land sales as compared to the second-highest bidder of the same auction. However, it does not necessarily win the subsequent sites. We argue that the incumbent deliberately bids up the subsequent land prices to gain pricing advantages to their own parcels.     

Revenue Sharing with Heterogeneous Investments in Sports Leagues: Share Media,Not Stadiums

This study examines revenue sharing in sports leagues where franchises engage in multiple types of investments. Previous literature typically treats revenues and investments as homogeneous, but we add to the literature by differentiating between investment types and revenue sources. This is important because investment in talent leads to winning, which is a zero-sum game for the league and therefore owners have an incentive to limit talent investment. However, other investments, such as stadiums, are not a zero-sum game, and therefore the implications of revenue sharing are different for the league. We provide sufficient conditions under which it is more efficient to share media revenue compared to stadium revenue. We conclude by providing applications of this model.     

The impacts of large trades by trader types on intraday futures prices: Evidence from the Taiwan Futures Exchange

We find that China's P/E ratio is comparable to that of the U.S. S&P 1500 index, a broad based index covering large, middle, and small capitalization firms. We provide an explanation as to why China's seemingly low P/E ratio is not surprising in light of the economic growth that it has experienced. Specifically, we show that (i) the P/E ratio is negatively associated with earnings volatility in both the Chinese and U.S. stock markets with an economically significant magnitude; and (ii) historical earnings volatility is considerably higher in China than in the U.S. Higher earnings volatility in China offsets higher growth prospect in setting the P/E ratio, making its P/E ratio much closer to what is observed empirically than otherwise implied by its growth rate.     

Dynamic order submission strategies with competition between a dealer market and a crossing network

We analyze a dynamic microstructure model in which a dealer market (DM) and a crossing network (CN) interact for three informational settings. A key result is that coexistence of trading systems generates systematic patterns in order flow, which depend on the degree of transparency. Further, we study overall welfare, measured by the gains from trade of all agents, and compare it with the maximum overall welfare. The discrepancy between both measures is attributable to two inefficiencies. Due to these inefficiencies, introducing a CN next to a DM, as well as increasing the transparency level, not necessarily produces greater overall welfare.     

The ERA: A Brave New World of Accountability for Australian University Accounting Schools

This study examines the potential impact of Excellence in Research for Australia (ERA) on Australian university accounting schools through a series of in-depth interviews with Heads of Schools. Using an institutional theory framework we find that the pending introduction of the ERA has brought about changes in school structures, processes and systems. A creeping isomorphism is apparent as evidenced by a sector-wide movement towards targeting publications in highly ranked North American journals. While participants were generally positive about the overall aims of the ERA many felt that it would marginalise non-mainstream research. Furthermore, they were of the opinion that the ERA would lead to a reduction in the standing of accounting schools within Australian universities relative to other disciplines.