Investigating the Valuation Effects of Announcements of Voluntary Corporate Selloffs

While there has been an abundance of empirical research on the subject of mergers and acquisitions, little research exists on a closely related topic—voluntary corporate selloffs. This study examines the effect on shareholder wealth of the announcement by management of an investment decision to voluntarily sell part of its operations to another firm. Positive abnormal returns are found to occur on the announcement date. However, it is found that such selloffs generally occur after a period of abnormally negative returns, suggesting the announcement is preceded by the release of negative information about the firm.     

WELFARE EFFECTS OF GOVERNMENT INTERVENTION IN EDUCATION

Distortive effects of government intervention, especially in international trade, have received considerable attention. But not much literature exists on similar effects of public policies toward education. This paper provides a review of government intervention in education and its likely effects on economic growth and equity. Although governments may act with good intentions, educational policies often have adverse effects on social welfare. Less government involvement in education might actually lead to greater and more equally distributed real income, especially in developing countries.
Section I of this paper identifies and documents the extent of government-induced distortions directly or indirectly related to education. Section II assesses the likely effect of such distortions on social welfare. The final section discusses the role of government in education.     

NEW ESTIMATES OF THE U.S. ECONOMY'S POTENTIAL GROWTH RATE

Using an Okun's law framework, the analysis here estimates potential growth for the 1990s as measured by both fixed- and chain-weighted GDP. It then decomposes estimated potential growth rates into labor productivity growth (LPG) and labor input growth (LIG) using a regression analysis to separate secular from cyclical changes. It compares estimates of potential output and trend productivity growth for the 1990s with estimates from earlier periods. Results indicate that eliminating the substitution bias associated with fixed-weight measures of real GDP raises estimated potential GDP growth in the 1980s but lowers it in the 1990s. A slowdown in labor force growth, with little or no change in long-term productivity growth, largely accounts for the implied slowdown in potential growth.     

Poverty among the elderly in late Victorian England1

Despite rapid increases in manual workers' wages, poverty rates among the elderly remained high in late Victorian England, although they varied significantly across Poor Law Unions. This paper begins by examining the ability of workers to provide for their old age. A data set is constructed, consisting of all English Poor Law Unions in 1891–2, and regression equations are estimated in order to explain variations across unions in pauperism rates. This is followed by the testing of several conjectures made by contemporaries, and repeated by historians, regarding the deterrent effect of workhouse relief, the effects of wages and of the industrial character of Poor Law Unions on pauperism rates, and regional differences in workers' reliance on the poor law. The paper then examines the implications of these results for the debate over national old age pensions in the decades before the adoption of the Old Age Pension Act.     

Materialism and Life Satisfaction: The Role of Stress and Religiosity

Materialism has been a topic of interest to consumer researchers for decades. This article explores the effect of materialism on individuals' life satisfaction using a large sample from Malaysia, a country with cultural diversity within a collectivist mainstream culture. The results suggest that the effects of materialism on life satisfaction could be indirect, mediated by stress and moderated by religiosity. The study helps to explain the mechanisms that account for the negative relationship between materialism and life satisfaction reported in previous studies conducted in many countries; it provides a blueprint and directions for further research.     

RETAIL GASOLINE PRICE DYNAMICS AND LOCAL MARKET POWER*

Using monthly data from the 48 contiguous states (except Nevada) for the 1988–2002 period, it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases. Moreover, markets with high average retail‐wholesale margins experience a slower adjustment and a more asymmetric response. Since gasoline is the only variable input, average margins in a state likely reflect the degree of retail market power. This suggests that sticky prices and response asymmetries in the gasoline market are, at least partially, a consequence of retail market power.     

On the Stewardship and Valuation Implications of Accrual Accounting Systems

In this paper we explore the role of accruals in determining “earnings quality” from both a stewardship and a valuation perspective. We show that the valuation and stewardship qualities of accrual accounting are maximized by either an “aggressive” or a “conservative” accrual strategy. Furthermore, accrual strategy choices can be delegated to management as it does not benefit by implementing a strategy that is not in the best interests of the shareholders. We also investigate the implications of accrual strategies for standard empirical measures of “earnings quality”: regression coefficients and R²s from price‐earnings and market‐to‐book regressions. We show that such measures respond differently, and in some cases adversely, to the kind of strategies that make accounting constructs more correlated with the underlying economic activities of firms.