Performance Changes Following Top Management Dismissals

We document that forced resignations of top managers are preceded by large and significant declines in operating performance and followed by large improvements in performance. However, forced resignations are rare and are due more often to external factors (e.g., blockholder pressure, takeover attempts, etc.) than to normal board monitoring. Following the management change, these firms significantly downsize their operations and are subject to a high rate of corporate control activity. Normal retirements are followed by small increases in operating income and are also subject to a slightly higher than normal incidence of postturnover corporate control activity.     

Risk-Based Premiums for Insurance Guaranty Funds

Insurance guaranty funds have been adopted in all states to compensate policyholders for losses resulting from insurance company insolvencies. The guaranty funds charge flat premium rates, usually a percentage of premiums. Flat premiums can induce insurers to adopt high-risk strategies, a problem that can be avoided through the use of risk-based premiums. This article develops risk-based premium formulas for three cases: a) an ongoing insurer with stochastic assets and liabilities, b) an ongoing insurer also subject to jumps in liabilities (catastrophes), and c) a policy cohort, where claims eventually run off to zero. Premium estimates are provided and compared with actual guaranty fund assessment rates.     

DETERMINISTIC, STOCHASTIC, AND SEGMENTED TRENDS IN AGGREGATE OUTPUT: A CROSS-COUNTRY ANALYSIS

This paper examines whether output per capita in 126 countriesis better described as trend or difference stationary, usingappropriate finite-sample critical values. Depending upon whetherone uses solely a test with a trend stationary null, or solelyone with a difference stationary null, very different conclusionsare obtained. This outcome suggests that it is useful to considerthe tests complementary, rather than competing. We find thatwhen a definite characterization of GDP can be made, it is verylikely to indicate a difference stationary process. However,the likelihood of making definite conclusions does vary positivelywith both income level and data quality.     

THE ECONOMICS OF LOCAL PRICE INFORMATION SERVICES

This paper outlines the development of local price comparison surveys in the United Kingdom and assesses their efficacy and value to consumers. The economic significance of such price information services is also considered.