Book Reviews

Book Reviewed in This Article: THE CHALLENGE TO MANAGEMENT CONTROL John Storey MASTERS, UNIONS AND MEN: WORK CONTROL IN BUILDING AND THE RISE OF LABOUR, 1830–1914 Richard Price A CLASS AGAINST ITSELF—POWER IN THE NATIONALISATION OF THE BRITISH STEEL INDUSTRY Doug McEachern TRADE UNIONS AND THE INDIVIDUAL Alan Campbell PAY IN THE PUBLIC SECTOR R. F. Elliott and J. L. Fallick CURRENT CONCERNS IN OCCUPATIONAL STRESS C. L. Cooper and R. Payne (ed.)     

Properties of Economic Income in a Private Information Setting*

Abstract. This paper adopts a valuation perspective within an asymmetric information setting and explores properties of economic income. The optimal intertemporal contract induces an accrual component of income which would not exist absent the information problem. The contracting solution introduces a dampening effect—if cash flow increases by one dollar, income increases by less than one dollar. Thus, the accrual is inversely related to cash flows. Further, this dampening is greater for more favorable cash outcomes. Résumé. Les auteurs adoptent la perspective de l'évaluation en situation d'asymétrie de l'information et explorent les propriétés du bénéfice économique. Le contrat intertemporel optimal fait intervenir une amplification du bénéfice qui n'existerait pas si ce n'était de la présence du problème d'information. La solution contractuelle amène un effet atténuateur — c'est-à-dire qu'à une augmentation du flux monétaire de un dollar correspond une augmentation du bénéfice de moins de un dollar. Ainsi, l'amplification est en relation inverse avec les flux monétaires. En outre, l'atténuation est plus marquée dans le cas de résultats monétaires plus avantageux.     

Production-Based Asset Pricing and the Link Between Stock Returns and Economic Fluctuations

This paper describes a production-based asset pricing model. It is analogous to the standard consumption-based model, but it uses producers and production functions in the place of consumers and utility functions. The model ties stock returns to investment returns (marginal rates of transformation) which are inferred from investment data via a production function. The production-based model is used to examine forecasts of stock returns by business-cycle related variables and the association of stock returns with subsequent economic activity.     

An Investigation of Market Microstructure Impacts on Event Study Returns

We investigate the importance of bid-ask spread-induced biases on event date returns as exemplified by seasoned equity offerings by NYSE listed firms. We document significant negative return biases on the offering day which explain a large portion of the negative event date return documented in the literature. Buy-sell order flow imbalance is prominent around the offering and induces a relatively large spread bias. If order imbalances are suspected, the researcher can use returns calculated from the midpoint of the closing bid and ask quotes instead of returns calculated from closing transaction prices to avoid this return bias.     

Advance Notice: From Voluntary Exchange to Mandated Benefits

This paper examines the controversy surrounding advance notice within the framework of a simple jobless duration model that is based on the differential search intensity of notified and nonnotified workers. The determinants of notice are also analyzed to evaluate whether the observed benefits are a chimera produced by sample selection, and a procedure is outlined for calculating the effects of mandatory notice using voluntary notice data